Argentina’s central bank in conflict
TEXT OF STORY
Steve Chiotakis: It’s looking more and more likely that Fed Reserve Chairman Ben Bernanke will be re-appointed. In Argentina, however, the head of its central bank looks as though he might call it quits amidst a very public spat. From Buenos Aires, Ian Mount reports.
Ian Mount: Argentina defaulted on its loans eight years ago, and the International finance community cast it out. President Cristina Fernandez de Kirchner wants to pay back those loans and rehabilitate Argentina’s image. But this fight with central bank chairman Martin Redrado is getting in the way.
Dante Sica runs the economic advisory firm Abeceb.com. He says the longer Argentina delays paying down its debt, the more it risks looking like one of its less credit-worthy neighbors.
Dante Sica (voice of interpreter): This conflict comes at the worst moment because there’s an open window right now to return to the international financial markets. But from the outside, it seems like Argentina is the same as Venezuela.
The spat began when the president demanded Redrado hand over $6.6 billion to pay down the country’s debts. He stalled, so she sacked him. Or she tried to.
Opposition legislators said she couldn’t take the bank’s reserves or fire its chief without asking them. A judge agreed. An enraged Fernandez de Kirchner accused the opposition, judiciary and media of conspiring to hobble her government.
President Cristina Fernandez de Kirchner (voice of interpreter): Behind this whole question of the money there has been a huge political plot.
The opposition and some analysts claim that Fernandez de Kirchner will use the money not to pay down the country’s debt, but to fund programs that will help her win votes in next year’s presidential election.
Fausto Spotorno is chief economist at Orlando Ferreres and Associates:
Fausto Spotorno: The federal government, it feels that they need to spend more money to this year and the next year if they want to have a chance in 2011.
Fausto Spotorno says the spat has already hurt the Central Bank’s credibility with international investors. That could make it hard the country to borrow the money it needs, and make Fernandez De Kirchner’s reelection plans even more difficult.
In Buenos Aires, I’m Ian Mount for Marketplace.
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