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The government analyzes giving the Central Bank another profile
La Nacion
February 01, 2010

They would change its charter to allow use of reserves in plans for development

Mariana Ver n
LA NACION

After many public insinuations, the government finally decided to move ahead with the project to reform the charter of the Central Bank, which would be debated next month when ordinary sessions in Congress begin.

Last week, in a very discreet manner, ex-president Nestor Kirchner analyzed it in a meeting at the Olivos compound which included one interested in the initiative, federal Deputy and president of Banco Credicoop, Carlos Heller. Together with the head of Banco Naci n, Mercedes Marc del Pont, Heller wants to convert the monetary entity into a direct arm of the Executive Branch, whittling down its current autonomy, for its reserves, so under fire in the crisis over the creation of the Bicentennial Fund (which which debts would be paid and it would be an auxillary of the Treasury), to serve as a sustenance like a development bank.

With the stumbling block removed for the Casa Rosada from Martin Redrado's resistance to leave the presidency of the Central Bank last Friday he gave his "undeclinable" resignation the Kirchners believe that they've laid the path for the debate to start in March after a long postponement.

"We are going to discuss what the reserves will be used for. That will be our next battle," a high official in the government enthusiastically told LA NACION, who was in the middle of the fight with Redrado, which the Kirchners believe they've already won through the anticipated decision to be taken tomorrow by the special Congressional commission that will have to counsel the President about the economist's exit.

The Kirchner-Heller meeting has a special significance. The Deputy who represents the capital city who was sworn in with the ex-president on December 3rd is vice-president of the Finance Committee of the lower house, through which the reform bill will pass.

The initiative, which is part of a bill that had been presented by Marc del Pont during her time as a House Deputy and which did not move forward, would be debated in the first days of the legislative year, at the same time as when Congress takes up the decree of necessity and urgency with which Cristina Kirchner created the Bicentennial Fund. The heads of the pro-government blocks, Miguel Pichetto (Senate) and Agust n Rossi (House), will use it as a negotiating tool with the center-left to be about to gain support for DNU 2010 that authorizes the use of US$6.569 billion of Central Bank reserves to pay debt.

N stor Kirchner had already left open the possibility of making changes at the BCRA for several days, advising that the possibility of making changes in the entity's charter was a "pending subject". Now work has begun on the issue. "For several dyas it's been discussed how to make it a reality," said an official that is on top of the details, which would start based on what the president of Banco Nacion had written.

A minister told LA NACION yesterday that the bill is being worked on by the head fo the Palacio de Hacienda, Amado Boudou, and Sergio Chodos, one of the Central Bank directors who reports to the Kirchners.

"With the debate over the DNU [which created the Bicentennial Fund, there will also be an appearance of the use of reseves along with the reform of the financial entities law," a legislator involved told LA NACION. The government, in all ways, will hope to close the possible number of adhesions in Congress to announce a move forward on the legislation. After the disgust that Redrado's resistance to back paying debt with reserves caused the Casa Rosada, the government plans to avoid a new fight before the debt begins.

The idea that enthuses the Kirchner couple is that the Central Bank be converted into a growth sustainer, and whose reserves could be used for job-creation plans or infrastructure projects. One of the axes is the modification of Article III of its charter, which currently establishes that policies implemented by the monetary authority will not be subject to the orders or indications of the Executive Branch.

According to what had been authored by the president of Banco Nacion, the organization couldn't be totally autonomous of the government. "It has to coordinate policy," Marco del Pont said, when Kirchner again floated the possibility of modifying the charter of the entity, just as the fight began with Redrado for his resistence to use reserves to pay debt.

The government believes it has already wn the fight with the economist. Despite what Cabinet Chief Anibal Fernandez had said last Friday, at the time Redrado announced his resignation at a press conference, that the President will not accept the resignation until Congress makes a decision, which will be tomorrow at the Casa Rosada, they ruled out yesterday there could be any movement today for the chief of state to explicitly reject the resignation. "A decision will have to wait until Tuesday," an official source said.

Beginning with the counsel in a reserved manner that the bicameral commission made up of Vice President Julio Cobos and Deputies Gustavo Marconato, for the government block and Alfonso Prat-Gay, for the Civic Coalition, Cristina Kirchner will issue another decree, this time not a DNU, to confirm the explusion of Redrado.

After that moment, the government and it's allies in Congress will spend the month concentrating on the search for allies for the decree that created the Bicentennial Fund to be ratified in the Senate. The DNU will become effective with the approval of one of the two Houses. Meanwhile, in Deputies they will begin the plan to promote the debate of the charter reform, the next great battle the Kirchners want to wage.

KEY POINTS

* Timing: the government plans to take advantage of the debat on the decree which created the Bicentennial Fund to reform the charter of the Central Bank.

* First steps: in March, when the ordinary sessions of Congress begin, the Casa Rosada will present a bill that until now it had avoided.

* Bill: The Kirchner couple plans to toss out the autonomy of the monetary entity in function of Article III of the charter, which prohibits interjection of the Executive Branch in decisions of the Board of Directors.

* Reserves: another point of debate will be the allowing of the use of reserves for employment projects or infrastructure and public works, which would act as a development fund.

* Seduction: the modifications would be a way for the government to approach the center-left blocks, which they'd need to get through any debate in the House of Deputies.

* Authors: the initiative is based on a bill that had been introduced when the president of Banco Nacion, Mercedes Marc del Pont, was a Deputy.

* Banks: also on the table is a reform of the financial entites law that Deputy Carlos Heller is promoting, an ally of the government.

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