MercoPress. South Atlantic News Agency
Argentina’s Central bank stand-off: police to block access of Redrado
Argentine central bank President Martin Redrado vowed to stay in his post until Congress considers a government decree firing him for not setting aside 6.6 billion US dollars in reserves to pay debt due this year.
“It would be irresponsible on my part to back down against pressures that would leave the road open to those who want to manage the people’s reserves, without following the steps set down in the law for the removal of central bank directors,” Redrado wrote in a column in Sunday’s La Nacion newspaper.
President Cristina Fernandez de Kirchner signed a decree firing Redrado on January 7 for not backing her plan to tap the reserves. A judge halted that decree the following day, as well as an order to tap the reserves. A congressional committee is to consider the decree against Redrado at a January 26 hearing, although the panel’s decision isn’t binding.
Cabinet Chief Anibal Fernandez anticipated last Friday and was confirmed over the weekend by Mrs. Kirchner that Redrado “won’t enter” the bank again. The cabinet chief said the Federal Police had been instructed to surround the building. Newspapers and television channels in Buenos Aires showed police officers outside the bank this weekend to prevent Redrado from entering.
The central bank can’t receive “instructions” from the executive branch, Redrado wrote. “For all of this, I maintain my decision to continue doing my duties until Congress says otherwise, to be loyal to the national interest, to the mission assigned me and to my convictions.”
The Argentine central bank has international reserves totaling 48 billion US dollars.
The president of the Central bank is not exposed to the dilemma of “obeying” or “rebelling” against instructions from the Executive. Simply it can not comply with them because the bank is autarchic and its president was voted in by Congress, said Redrado in his column.
The 6.6 billion USD the Kirchners have set their eyes on are partly to face debt maturing this year to the tune of 13 billion USD and to begin normalizing the situation with the sovereign bonds “hold-outs” estimated in 20 billion USD.
This is limiting Argentina’s access to voluntary money markets at reasonable rates.
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Read all commentsBarrado's moves to block the use of Banco Central reserves were what he was expected to do under the stringent laws governing the bank whose reserves are kept to maintain Argentina's currency value vis á vis the value of other world currencies. The Executive Power abused of its rights by issuing a decree to expel Redrado but the decree was basically illegal and made the Central Bank chairman to oppose legal defence to stay in his post. The pretended use of the reserves was NOT to pay external debt but, as the Government itself recognised on a 59-pages long document presented to the Chamber Courts, to pay for “expenses”. When the budget for 2010 was voted, the payment of external compromises was secured with an amount reserved for the Fondo del Bicentenario, but these funds disappeared somehow at Mrs. Kirchner's hands or of her administration. That was the reason she re-invented the Fondo del Bicentenario alibi to grab reserves and compensate the deficit, which would have severely endangered currency stability bringing in an inflation that would eat-up salaries, privately held reserves and savings, and brought the country to a standstill. Now that apparently Redrado will not be back to his post, the danger of manipulation of the Central Bank's reserves and balance-sheets - as done in the INdeC - is very high and shouldn't be watched with a blind eye. Cheers!
Jan 27th, 2010 - 01:47 am 0Commenting for this story is now closed.
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