Alfonso Prat-Gay was fired as Argentina’s finance minister on Monday after just one year in the post as a long-heralded recovery in the economy fails to materialize.

The ministry he headed will now be split into two, with Luis Caputo, who was finance secretary, heading the new Finance Ministry and Nicolas Dujovne overseeing the Economy Ministry, Cabinet Chief Marcos Pena told a press conference in Buenos Aires. Prat-Gay’s spokeswoman Yael Bialostozky didn’t reply to calls seeking response.

President Mauricio Macri requested Prat-Gay’s resignation following disagreements over economic policy, Pena said. The economy has sunk into recession this year, defying President Macri’s forecast that it would return to growth in the second half, while the inflation rate has risen to about 40 percent. Prat-Gay had pushed for policies to revive growth, while central bank President Federico Sturzenegger had prioritized the fight against inflation.

“Since the very beginning of the administration we’ve witnessed this fight between combating inflation and stimulating growth,” said Carlos Aszpis, an analyst at Buenos Aires-based brokerage Schweber Securities SA. “It’s clear that the dispute between the central bank head and Prat Gay was won by Sturzenegger.”

Gross domestic product fell 3.8 percent in the third quarter from a year earlier, the statistics agency reported on Dec. 22 as rising prices eroded people’s purchasing power.

Inflation accelerated after the government removed subsidies on gas, electricity and water and Prat-Gay freed up controls on the exchange rate, triggering a slump in the peso. Price-growth is now running at an annualized pace of 19 percent, Sturzenegger said on Dec. 22. High inflation economies that bring annual price increases to below 20 percent typically double their growth rates, he told reporters.

Argentina’s benchmark Merval stock index swung to a loss after the announcement. At 1:02 p.m., the index was down 0.8 percent after having traded little changed during most of the morning. The top losers were Pampa Energia SA, which retreated 4.1 percent, and Mirgor SA, which fell 3.3 percent.

Dujovne is an “excellent economist with vast experience,” said Gaston Rossi, director of Banco Ciudad. Still, he may face a similar problem to Prat-Gay – limited control over the budget.

“The doubt is how much power he will have to confront the fiscal challenge, whether he will have more room for maneuver,” Rossi said.

Despite Prat-Gay’s international profile, the government’s relationship with Wall Street shouldn’t be endangered by his resignation, Rossi added. It was Caputo who successfully negotiated an accord with creditors earlier this year in New York, he said.

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