MercoPress. South Atlantic News Agency

Redrado barred from Argentine Central Bank, the dispute moves to Congress

Alfonso Prat.Gay represents the opposition in the special congressional committee to decide on Redrado’s fate

Police stopped the head of Argentina's central bank from entering the bank on Sunday evening, hours after he vowed to stay in his job despite a court ruling that the government said meant he had to step down.

Martin Redrado, who is locked in dispute with President Cristina Fernandez de Kirchner over her plan to use central bank reserves to pay debt, said he went to the bank with his lawyers to see if he would be allowed to enter the premises but that police officers stopped them.

”(This shows) a flagrant violation of the court's order“ Redrado said in a statement, adding that he had presented a legal complaint against Cabinet Chief Anibal Fernandez for ”impeding him from carrying out his duties“.

President Cristina Kirchner fired Redrado earlier this month because he opposed her bid to use 6.6 billion US dollars in foreign currency reserves to service debt obligations this year, but a court ordered his reinstatement a day later and froze the use of the bank’s international reserves.

Mrs. Kirchner’s push to tap the reserves to help meet some 13 billion USD in debt repayments this year has raised political tension in Argentina, rattling financial markets and raising concerns a planned 20 billion USD bond swap could be delayed.

Another court ruled on Friday that Congress should decide whether Mrs. Kirchner was right to fire Redrado, but government ministers interpreted the ruling as also saying he had to quit.

Cabinet chief, Anibal Fernandez, said Redrado would not be allowed to continue working at the bank and the bank's board of directors named Vice President Miguel Pesce as Redrado's replacement.

Mrs. Kirchner had already named Pesce as Redrado's replacement before the federal court ordered his reinstatement.

Constitutional experts and lawmakers from both Argentina’s ruling party and opposition also said the latest ruling meant Redrado should step aside, but in a letter to a leading newspaper on Sunday, Redrado pledged to stay on in his job.

”I maintain my decision to continue carrying out my duties as an official unless Congress says otherwise in order to comply with the law and my convictions,” he wrote in the letter published in daily La Nacion.

A special 16 member congressional commission (evenly split between government and opposition) is scheduled to meet on Tuesday to discuss Redrado's fate but Mrs. Kirchner has stressed that any recommendations it makes are nonbinding.

Friday's court rulings dealt another setback to the cash-strapped government's plan to tap part of the central bank's 48 billion USD in foreign reserves, upholding an earlier court freeze on the transfer of funds to the Treasury.

However most analysts believe that Mr. Redrado as president of the bank is condemned, but Mrs. Kichner can only name an “interim” replacement, since it’s congress that has the power to do so.

A leading opposition representative in the congressional special commission, a former Central bank president Alfonso Prat-Gay, dissents with Redrado who proclaimed himself as the “defender of the bank’s reserves”.

“His job is not to accumulate reserves but to ensure the value of the peso, and Argentina has the highest inflation in the region” said Prat-Gay.

Furthermore with Redrado out, the battle with the opposition seems oriented as to whether the Executive can appeal to rule based on special emergency decrees and vetoes in the last two years of Mrs. Kirchner’s administration after having lost its congressional majority last June.

This obviously opens a big question mark as to how Argentina is going to meet its financial commitments this year and how the bond swap is going to evolve.

Plus the “vulture funds” (that hold a significant percentage of defaulter bonds) always ready for the slightest mistake from Argentine authorities to request an embargo of available assets overseas, particularly if the Central Bank looses its condition of “autarchic” from the Argentine Treasury.