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Anger in government with Redrado
La Nacion
January 07, 2010

They blame him for blocking the instrumentation of the presidential decree that created the Bicentennial Fund and putting economic policy at risk.

Mariano Obarrio
LA NACION

The delay by the Central Bank in transferring more than US$6.5 billion of its reserves to a national Treasury account, as was made available by a decree from President Cristina Kirchner three weeks ago, raised the level of anger in the government with the president of the highest monetary authority, Martin Redrado, who could set off an incipient political crisis.

"There are officials that have come forward on how to manage the communications impact if this turns into a crisis," a high official confided to LA NACION.

According to what came out yesterday, the Casa Rosada sent a clear message to Redrado: free up the Central Bank reserves funds as soon as possible and do not put the economic policy of the Executive Branch at risk.

"There is a deep anger at Olivos with Redrado: he is putting up to a screen of judgment nothing less than a decree of necessity and urgency (DNU) by the president," official sources said.

DNU number 2010/09 set up the Bicentennial Fund, for which the Executive Branch obliged the BCRA to transfer US$6.569 billion in its reserves to the national Treasury to guarantee debt payments in 2010.

Sources close to the head of the Central Bank denied to LA NACION have "gotten pressure." However, other sources at the Casa Rosada said that there was a top-secret call placed to Redrado by the Legal and Technical Secretary to the Presidency, Carlos Zannini, a man close to Cristina and Nestor Kirchner.

Both the Casa Rosada and the BCRA want to take care to avoid a negative impact on the financial markets. The struggle has a legal limit: the Central Bank is an autonomous entity from the Executive Branch, and Redrado must comply with the mandate fixed for him by law, and his term ends on September 23rd of this year.

But there are also economic and financial limits. "To replace Redrado or openly question the BCRA would be a very bad signal to the credit markets, who they are trying to seduce," they say at Balcarce 50 (the address of the Palacio de Hacienda, headquarters of the Economy Ministry).

Economy Minister Amado Boudou, with the president's backing, wants to give signals of confidence to the financial world to be able to access the voluntary credit markets in 2010 and get financing at low interest rates, in a complicated fiscal year. The use of the reserves, in fact, was conceded to generate confidence in the markets and have greater liquidity before the possible rise in spending.

But no one can prejudge for now how Nestor Kirchner could react if the BCRA delays indefinitely the formalization of the DNU signed by the president.

Cristina Kirchner held a two hour meeting with Minister Boudou the day before yesterday. According to official sources who spoke in confidence to LA NACION, they analyzed in detail, with deep worry and nervousness, the attitude of the BCRA board of directors and of Redrado.

The anger was present. And the same meeting was seen as a political endorsement by the president for Boudou, who was full of praise. The Economy Minister, however, is seeking to avoid an open confrontation with the head of the BCRA: he has to seek good personal relations with Redrado and is a party to the maximum protection of the appearance of autonomy of the Central Bank.

The eventual replacement of Redrado is something that for now is not mentioned in the government as a certain possibility.

The anger in the government also comes from Redrado, during the presentation of the Monetary Program of 2010, let slip that the search for credit in the voluntary markets cannot be done through short cuts, in reference to the DNU in question.

The monetary authority is now delaying the execution of the DNU because its leadership is analyzing the possible legal impact.

Also, the DNU was attacked in Congress and before the Supreme Court, from a claim of unconstitutionality from the province of San Luis. The high court demanded a preliminary report from the Executive Branch on the fundamentals of the measure, which will have to be sent by the president next week, about which she spoke with Boudou at that meeting.

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