MercoPress. South Atlantic News Agency

Uruguay benefiting from Argentina’s constitutional showdown

Carlos Protasi, former Uruguayan central bank governor

The constitutional showdown in Argentina triggered by President Cristina Fernandez de Kirchner attempt to fire Central Bank president Martin Redrado will benefit Uruguay that is poised to receive more investments from Argentine businessmen, according to Uruguayan financial sources quoted in the local media.

Former Central bank president Carlos Protasi said that the current economic policy from the Kirchner couple in Argentina “benefits Uruguay more than expected”, and he added that “currently the worst things run for Argentina, the better for its neighbours”.

Protasi anticipated that the fall of the Kirchner couple, if it happens and when it happens, will be cheered by financial markets worldwide and that the “unbelievable decisions” taken by the Argentine government such as export levies on grains and oilseeds, increasing taxes or taking over the pension funds have benefited Uruguay with a considerable increase in the inflow of investments.

Pablo Moya, from consultants Oikos said that the growing uncertainties created by the Kirchner administration will lead “to an increase in bank deposits in Uruguay, which will be undoubtedly most evident”.

“And this is not something that will cease in the coming ten years unless Argentina drastically changes and ensures legal, political and economic stability”, said economist Moya.

Javie De Haedo, a former head of Uruguay’s Planning and Budget Office said that the situation will confirm to many Argentine investors withdrawing their money from that country “that they are doing the right thing” and that they will continue to do business in Uruguay “which ensures them what they don’t have in their own country”.

The Argentine government plan to use Central Bank reserves to pay foreign debts has turned into an institutional crisis, following the bank’s governor, Martín Redrado, refusal to lease the money for a Bicentennial Fund.