BUENOS AIRES (Reuters) - Argentine President Mauricio Macri has asked Finance Minister Alfonso Prat-Gay to step down, cabinet chief Marcos Pena said on Monday, citing disagreements over management style and the structure of the team charged with handling economic policy.

FILE PHOTO: Argentine President Mauricio Macri (R) walks alongside Finance Minister Alfonso Prat-Gay at the Olivos presidential residence in Buenos Aires, Argentina, May 6, 2016. REUTERS/Enrique Marcarian

Prat-Gay’s departure is part of a reorganization under which the Finance Ministry will be split in two as the economy remains in recession with a wide fiscal deficit a year into Macri’s term.

The ministry will now have a treasury division, led by economist Nicolas Dujovne, and a finance division, led by current finance secretary Luis Caputo, who has reported to Prat-Gay.

Some analysts said the change could signal greater commitment to fiscal tightening, though the split of responsibilities could bring coordination issues and the sacking of a high-profile minister could spook foreign investors whose support Macri needs ahead of key legislative elections next year.

Pena said the decision to ask Prat-Gay to leave was related to management issues rather than disagreements over economic policy. Macri has sought to close Argentina’s gaping fiscal deficit, but the government has steered away from a sharp austerity approach to avoid worsening a deep recession.

“Due to the disagreements that there were at times over the design and functioning of the team, we thought it was best for the team at this stage to make a change,” Pena said at a news conference.

Dujovne will be in charge of the federal government’s budget and leading Argentina on “a path to a fiscal balance,” Pena said, while Caputo will oversee government finance and sales of sovereign debt, as well as improving Argentina’s domestic financial system.

Rumors about Prat-Gay’s future had swirled in recent weeks after an income tax proposal crucial to the government’s deficit reduction targets failed in Congress, forcing the government to renegotiate a new deal with the opposition.

The change was announced on a U.S. market holiday, and the reaction in Argentina’s currency and stock markets was limited, a trader said.

Latin America’s No. 3 economy continues to suffer through inflation seen reaching 40 percent in 2016, while economists see the economy shrinking 2.3 percent. The government has promised a return to growth in 2017, driven largely by public works spending.

The 2017 budget presented by Prat-Gay in September foresees a deficit of 4.2 percent of gross domestic product, higher than the 3.3 percent originally anticipated.

Prat-Gay will remain in place until the end of the week, Pena said.

A TECHNOCRAT, A DEALMAKER

Prat-Gay, a former head of foreign exchange research at J.P. Morgan who headed the central bank immediately after the 2001-2002 economic crisis, joined Macri’s administration after serving in the lower house of congress for several years.

He was instrumental in lifting Argentina’s currency controls and negotiating a deal with holdout creditors over debt that Argentina defaulted on in 2002, two of the center-right Macri administration’s main achievements after taking office last December, ending more than a decade of populist rule.

Dujovne served for a decade as chief economist for Banco Galicia and currently runs his own consultancy. He is seen by the markets as more of a technocrat than Prat-Gay, with less political ambition, said Miguel Kiguel, executive director of Buenos Aires-based consultancy Econviews.

“People see him as more orthodox on fiscal policy,” Kiguel said, adding that the change would reassure markets that Argentina would meet its 2017 deficit goal and reach primary fiscal balance by 2018. “Prat-Gay had not shown a medium-term fiscal plan.”

Caputo also played a crucial role in the deal with holdouts, coordinating with a court-appointed mediator in the legal dispute before Macri even took office and leading marathon negotiating sessions. The deal paved the way for Argentina’s return to international credit markets for the first time in more than a decade.

Pena praised Caputo’s performance as finance secretary, calling him an “ideal person” to seek “sustainable financing.”

But his close association with Prat-Gay could disappoint bondholders who were looking for a stronger fiscal effort, said Hernan Hirsch of local consultancy FyE Consult.

“This change means more of the same, and does not show a path toward greater fiscal sustainability,” said Hirsch, adding that internationally traded Argentine asset prices could dip when the U.S. market reopens on Tuesday.