MercoPress. South Atlantic News Agency

Political standoff in Argentina over sacking of Central Bank president

Martin Redrado insists that Congress must vote on using bank reserves to pay debts

A political standoff over the head of Argentina's central bank materialized Wednesday after the bank's president declined to support a plan to use 6.5 billion US dollars in reserves to pay debt.

Argentine President Cristina Fernandez de Kirchner announced that she accepted the resignation of Central Bank President Martin Redrado. But Redrado's spokesman fired back Wednesday, telling the state-run Telam news agency that the bank president “is not resigning from his post.”

The dispute appeared to stem from a government plan to use 6.5 billion USD in reserves from the Central Bank to pay down debt, something that the central bank, as an independent body, declined to do.

According to Redrado, the proposal should be studied to see if such a request should come from the congress, rather than the nation's president. Because of Redrado's failure to back the plan, Mrs. Kirchner reportedly asked for his resignation.

Mrs. Kirchner’s cabinet chief, Anibal Fernandez, said that on various occasions, Redrado had said that he served at the pleasure of the president. But now that Cristina Kirchner tried to take him up on it, the central bank chief is digging his heels in.

Under Argentinea law, it is the congress, and not the president, who can fire or name the head of the central bank. Redrado's current term ends in September.

Some of Mrs. Kirchner's political opponents have rallied around the central bank president.

However Argentina's private-sector banks association, Adeba, on Wednesday called on Redrado to end a showdown with the government and step aside, to preserve the stability of the financial system.

In a statement, Adeba, presided over by Banco Macro (BMA) President Jorge Brito, said it “firmly believes that the fund will contribute to the reduction in country risk.”

That in turn would improve the efficiency of the financial system, lower interest rates and improve the availability of credit, Adeba

In related news economist Mario Blejer said he is willing to accept the post to become head of the Central Bank of Argentina, on certain conditions.

“The use of reserves should come from the law, not from DNU emergency decrees,“ he said. This weekend, he will return to Argentina from France, where he is vacationing with his daughter.

Blejer received the call from Economy Minister Amado Boudou earlier, who said that ”Redrado had resigned“ and that ”the country needed him.” Blejer accepted the offer, but maintained a certain distance from the dispute that arose after learning of Redrado's resistance to the situation. Supposedly, Redrado wanted to speak directly with Blejer as well.