To save money, Mexican president says won't replace chief-of-staff

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Mexico's President Lopez Obrador addresses to the nation on his second anniversary as President, at the National Palace in Mexico City

MEXICO CITY (Reuters) - Mexican President Andres Manuel Lopez Obrador said on Thursday he would not replace his outgoing chief-of-staff Alfonso Romo and will close down his office in order to save money.

Lopez Obrador said on Wednesday that Romo, a longtime ally and millionaire entrepreneur known for his outreach to business groups, would step down after two years in the job.

The leftist president said Romo would continue to act as a go-between for the government and the private sector, a role that has often been strained over Lopez Obrador's skepticism about private sector involvement in areas such as energy.

"We won't have that office any more because (Romo) will still be helping me without being a government official, and we'll take advantage to make savings too," Lopez Obrador said.

Romo's office employed about 40 staffers within the presidential office, which has about 1,000 employees, according to a government source who spoke on condition of anonymity.

Most of the 40 workers will be reassigned to other government agencies, the source said.

The head of a major brokerage, Romo was a rare tycoon enthusiastically backing Lopez Obrador, who has often butted heads with business, notably in the oil and electricity sectors where the president has championed a state-centric policy and sharply limited opportunities for private investors.

In a note, consultancy Teneo described the loss of the chief-of-staff and his office as "a blow to pragmatism", predicting ties with the business community could worsen, but also cautioning against overstating Romo's past effectiveness.

(Reporting by Anthony Esposito and David Alire Garcia; editing by Grant McCool)