MercoPress. South Atlantic News Agency

An estimated 34 billion US dollars have fled from Argentina

The Argentine Central Bank must ensure that the flight of capital does not erode the “wealth of the country”, warned a former head of the bank, who revealed that since the beginning of the crisis 34 billion US dollars had fled from South America’s second largest economy.

“The capital flight process begun when institutional mistrust and legal insecurity took roots in the last quarter of 2007”, pointed out economist Rodolfo Rossi.

He added that Argentina at that time “lost 8.8 billion US dollars; 23.1 billion in 2008 and 5.7 billion so far this year”.

Rossi said that the Argentine Central Bank under its current president Martin Redrado has acted “with prudence”, but his job is not only “to preserve the Argentine peso stability but also impede the country’s wealth from fleeing”.

He estimated much of those funds are in security coffers of in overseas accounts, mainly neighbouring Uruguay.

Rossi said that President Cristina Fernandez de Kirchner conflict with the farmers was the milestone which triggered the flight to a “general mistrust” which was emphasized when the private pensions fund scheme was nationalized.

“This was further distorted by the naming of political appointees in the private pensions fund board of directors and disposing funds with certain degree of discretionarily plus the intention of nationalizing all deposits”, pointed out Rossi.

If this finally occurs “the situation for the saver and /or depositor and the shareholders of banks would not mean much since the Central Bank would be responsible. However the Central Bank could use the money to help finance the national budget and support government financial institutions”, warned Rossi.