Argentine telenovela

7 January 2010 By Martin Hutchinson

The central bank chief nobly resisting the government s plans to seize reserves is refusing to step down. He won t succeed in keeping President Fernández from raiding the bank s $48 bln cookie jar. But he ll be vindicated when Argentina enters another crisis as the funds run dry.

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In defiance of Argentine president Cristina Fernández de Kirchner, the country's central bank governor Martin Redrado has refused to step down, saying only Congress can remove him. Supporters of the president did poorly in the June 2009 legislative elections, so she no longer has a majority in either house of the Argentine Congress.

The dispute relates to $6.6 billion in reserves that the government has ordered disbursed to a Bicentennial Fund" set up in December to make payments on Argentina's foreign debt, about $15 billion of which matures in 2010. The funds are expected to be used to pay $2.2 billion to official creditors and $4.4 billion to private creditors. The central bank claims Argentina currently has $48.1 billion in foreign exchange reserves.

ViceGovernor Miguel Angel Pesce is expected to chair Jan. 7's board of directors meeting, and has said he supports the disbursement to the Bicentennial Fund. The original decree setting up the fund would allow an additional $8.4 billion of central bank reserves to be disbursed to it on request of the government.

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