MercoPress. South Atlantic News Agency

Argentine court keeps freeze on Central Bank reserves

President Cristina Fernandez de Kirchner insists with the Bicentennial Fund

An Argentine federal court kept a hold on the government’s plan to use 6.6 billion US dollars in Central Bank reserves to pay debt, sending the case to the Supreme Court for a final ruling, Argentina’s Court Information Center Web site said.

President Cristina Fernandez de Kirchner’s government filed a motion Feb. 5 asking the judges to send the case to the Supreme Court after they blocked her decree ordering the use of the reserves to create a Bicentennial Fund to help pay debt due this year. The judges ruled against freeing the reserves while the case proceeded.

Mrs. Kirchner announcement in December creating the Bicentennial Fund (as collateral demanded by foreign creditors to negotiate pending debts) bolstered confidence in the country’s ability to meet its obligations, leading to a rally in the country’s bonds. Yields have since increased after a dispute over the plan led Mrs. Kirchner to fire central bank President Martin Perez Redrado who refused point blank to such a request without the support of Congress.

However the new Central bank president Mercedes Marcó del Pont said earlier this week that the bank would transfer to the Treasury the institution’s 2009 profits which amount to almost the same figure as the Bicentennial fund.

To go into effect, the decree to tap the central bank’s 47.8 billion US dollars in reserves must also be approved by at least one of the two chambers in congress, where opposition parties hold a majority. Congress will return from a summer recess March 1.

“Next week, Congress will discuss this decree and, given the current situation, I think we are going to reject it,” opposition Senator Ruben Giustiniani told reporters in Buenos Aires. “We have to discuss what the sustainable level of reserves that the country needs to sustain the value of the currency is to protect workers’ wages and contain inflation.

In related news President Cristina Kirchner hosted a lunch with Argentina's leading business representatives in the Olivos presidential residence, where she defended the Bicentennial Fund and supported Economy Minister Amado Boudou, rejecting his resignation rumours.

“The creation of the Bicentennial Fund was not thought over night,” she said adding that the use of reserves is important to generate the currency and economic stability. “We have to recover our confidence” in the markets to lure investment.

Among the guests were members of the Argentine Industrial Union (UIA), the Argentine Business Association (AEA), the Argentine Chamber of Commerce (CAC), Argentine Chamber of Construction, the Buenos Aires stock market and leading businessmen like Alfredo Coto, Eduardo Eurnekian, Luis Pagani, Aldo Roggio, Cristiano Rattazzi and Jorge Britoso.