Argentine President Mauricio Macri sacked his finance minister Alfonso Prat-Gay on Monday, shaking up his economic team amid a stubborn recession that has made his center-right reforms deeply unpopular.

"The president asked him to resign," chief of staff Marcos Pena told a press conference. "It's a matter of policy differences."

Prat-Gay's ministry will be split in two, Pena said.

Nicolas Dujovne, a respected economist, will take over as finance minister. Luis Caputo, who previously served Prat-Gay as budget secretary, will take over the newly created budget ministry.

Caputo was the government's envoy for negotiations that ended Argentina's decade-old legal battle with US hedge funds demanding full repayment on defaulted Argentine bonds.

It is Macri's first cabinet reshuffle since he swept to power just over a year ago, putting an emphatic end to 12 years of left-wing rule.

Prat-Gay had been instrumental in a flurry of market-oriented reforms, including the end of foreign exchange controls -- which triggered a sharp devaluation of the peso and sent annual inflation soaring above 40 percent.

Other reforms under his watch included the removal of subsidies for public transportation, electricity and gas, which triggered angry protests.

Macri says his reforms are necessary to revive Latin America's third-largest economy.

But as he starts his second year in office, the promised growth has yet to arrive.

Macri's government is banking on growth of 3.5 percent in 2017, with inflation falling to 17 percent.