News Center

Kirchners eye control of central bank
Financial Times
February 01, 2010

By Jude Webber in Buenos Aires

The joke among investors and economists in Argentina has long been that N stor Kirchner, President Cristina Fern ndez's husband and her predecessor in the job, is the country's real economy minister.

The question they are asking themselves now is: does the man many believe pulls Argentina's political strings want to be president of the central bank too?

The messy exit of Mart n Redrado, its governor, following a bitter political battle sparked by his refusal to hand over $6.5bn ( 4.7bn, 4.1bn) of reserves to a government debt repayment fund, opens the door to greater government influence over a supposedly autonomous institution.

"This will be a bank that will be directed by phone by Mr and Mrs Kirchner," said one economic analyst.

Mr Redrado's exit looks set to be confirmed tomorrow, more than three weeks after Ms Fern ndez tried to fire him by emergency decree for refusing to obey another decree she issued in December ordering the transfer of the reserves. Mr Redrado had clung to his job after winning an injunction halting his removal. But when, just over a week ago, a court ruled that a congressional commission should analyse his fate, in line with the central bank's charter requiring a prior, non-binding opinion from lawmakers if a government tries to remove a central bank chief, the government installed deputy governor Miguel Angel Pesce as interim governor. It also had police block Mr Redrado from entering the bank building.

With expectations increasing that the commission would recommend removing him, Mr Redrado sought on Friday to pre-empt things by quitting first. But in a bizarre twist, An bal Fern ndez, cabinet chief, said the president would not accept his resignation because the commission was still at work.

It is expected to make its recommendations tomorrow, and Ms Fern ndez is likely to waste no time then in confirming her January 7 decision to eject him.

Markets have already factored in Mr Redrado's exit. "They're not so much preoccupied with the political figure [of who replaces him] but with what happens to the [debt-repayment] fund and to reserves," says Antonio Cejuela at Puente Hermanos, a local brokerage.

Congress, which is in summer recess until March, will have the final say over whether the government can tap some of the bank's $48bn reserves.

The government insists the plan is still alive and Ms Fern ndez says it is a smart use of a portion of the $18bn reserves exceeding the -monetary base.

U.S. Government
Takes Action

Click here to view letters by the Administration and Members of Congress on Argentina's debt and economic policies.

The Debt and Europe

Click Here To Read More

ATFA Member Spotlight

National Taxpayer's Union

Open Letter to the U.S. House of Representatives: Protect Taxpayers from Judgment-Evading Nations

Click here to view other ATFA member activity

Join Us
Show your support for ATFA and our work regarding debt default by joining our growing list of supporters.

Tell Your Friends
Do you have friends or colleagues who would be interested in supporting ATFA? Send them an invitation to this site by clicking here.