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The government pressures Redrado to liberate the reserves
Clarin
January 06, 2010

Vice Minister of Economy Roberto Feletti, in a statement, accused the "right-wing opposition" of questioning the use of BCRA funds to pay debts. But it's the head of the bank that is resisting the granting of US$6.569 billion to the Treasury.

by Alejandra Gallo

The government has forced a decision by the Central Bank, led by Martin Redrado, on disbursing the US$6.569 billion in reserves requested by Cristina Kirchner to pay debt.

The political decision was taken at Olivos, according to government sources; but the execution of that order fell to the hands of the Vice Minister at Economy. Yesterday, in an unusual statement to the press, Roberto Feletti came out to repudiate "the attack by the right-wing opposition against the use of international reserves of the BCRA to face foreign commitments."

What Feletti is defending is the creation of the Bicentennial Fund which, via a decree of necessity and urgency (DNU) ordered the BCRA to deliver part of the monetary reserves to the government to pay foreign obligations. Now that DNU has to be ratified by Congress, which will take up this issue in March and the opposition has already come out against touching the reserves for this end.

The reserves total some US$48 billion and the government of Cristina Kirchner argues that taking that portion for the controversial fund doesn't put the strength of the system in jeopardy and that the existence of the Fund dispels uncertainty over if the country has the cash or not to settle debt maturities this year, which come to US$13 billion.

While the pen of the vice minister never mentions Redrado, implicitly its words are directed squarely at the top rank of the BCRA. The head of that entity, in fact, has refused up until now to open a special account in the name of the Treasury where the requested US$6.569 billion would be deposited as the government demands.

When asked on the statement by the Economy vice minister, Central Bank spokespersons preferred not to discuss it.

Feletti has a very low profile; however, yesterday it seems that the beginning of the year motivated him to leave the scene. He got to the Palacio de Hacienda at noon and in his office he wrote the four-paragraph statement. Curiously, he then took a mini-vacation until Monday. "What is in the statement is his position, while what he says is consistent with what the Minister believes" said his spokesmen.

The head of the Palacio de Hacienda, Amado Boudou, was at the margin of the decision and the writing of the statement yesterday, it was revealed by those in his circle, where they say Feletti is a many very close to Planning Minister Julio de Vido (a K-spade from the first hour). Other officials, in turn, believed that if it had been Boudou who'd spoken on this issue of differences between Economy and the Central Bank over the controversial Bicentennial Fund, they would have become insolvable.

In the fund, if the government counts on extra resources to pay the debt, the funds that originally were contemplated in the 2010 Budget for that end now would be spent on infrastructure projects, according to what the Economy Minister admitted at the end of the year.

In his statement Feletti yesterday insisted that the use of reserves for debt payment "frees up resources to sustain the stimulation of demand." And that those who criticize the measure "favor a context where people buy dollars or hide money under their mattresses" and "hide their intention of returning to the era of adjustments."

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