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Gov't aims to 'sell' Marc del Pont to Senate
Buenos Aires Herald
February 08, 2010

By Guillermo H skel, Herald staff

Peronist President Cristina Kirchner's appointment of Mercedes Marc del Pont to the Central Bank is a key move within her controversial plans to tap reserves to pay debts and her Victory Front is already seeking to convince the Senate into approving the new Bank head.

She was appointed after her predecessor Mart n Redrado refused to use 6.5 billion dollars in reserves to pay debts amid a scandal in which Mrs. Kirchner argues that the opposition refuses to allow her to pay the debts that the very opposition defaulted in 2001. The opposition accuses her of seeking to expand spending on patronage ahead of the 2011 presidential election.

Mrs. Kirchner suffered a tough defeat in June when 70 percent of voters voted against her in a mid-term election, leading her to lose the control she had on both Houses of Congress. However, she is still close to having her own quorum in the Senate, which is the body that must give the green light to Marc del Pont.

Marc del Pont has been appointed as a caretaker to complete the six-year period that should have been served by Redrado.

She is a highly respected economist and has received praise from the most outstanding opposition leaders as an individual, although they object to her plans to curtail the Central Bank's autonomy.

Legislators elected in June took office in December and the new balance of power meant the opposition taking the presidency of 41 out of the Lower House's 45 committees that were previously in the hands of the Victory Front. However, the opposition agreed to allow the ruling coalition to continue chairing four "management" committees, in part, in an effort to defuse Mrs. Kirchner's arguments that it and several sectors seek to topple her.

After the new legislators took office Congress adjourned ordinary sessions until March. The Senate did not have time to appoint its own committees but it is due to hold a preparatory session on February 24, when its Agreements Committee should be appointed. The committee would issue a resolution on Marc del Pont which should be later discussed on the floor.

Victory Front sources said that it is not yet clear whether the opposition would also consider the Agreements Committee a "management" one and hence leave its chairmanship to the ruling coalition.

The Victory Front controls 32 out of the Senate 72 seats, and the sources say that they have already ensured the support of two Tierra del Fuego ally Senators, Mar a Rosa D az and Jos Carlos Mart nez (both from the Affirmation for an Igualitarian Republic) and Neuqu n Senator Horacio Lores, of the centre-right Neuqu n Popular Movement (MPN).

The sources said that the Victory Front was seeking to convince two new La Pampa Peronist Senators, former governor Carlos Verna and Mar a de los ngeles Higonet, into giving their support to get the total 37 votes necessary to approve the appointment of Marc del Pont.

Both Verna and Higonet have kept a low profile during the month-long crisis that finally resulted in the sacking of Redrado.

Redrado was removed after a joint committee formed by Vice-President Julio Cobos, Victory Front deputy Gustavo Marconato and opposition Civic Coalition deputy Alfonso Prat Gay recommended Mrs. Kirchner to oust him, something that she had already done before by decree.

Voting for the removal were Marconato, and Cobos, whose decision sparked controversy as he is among the ones being accused by Mrs. Kirchner of seeking to topple her.

In July 2008 his vote in the Senate forced her to roll back export duties hikes amid a row with farmers that continues to the present and that was a key factor in her June mid-term vote defeat.

The committee should have also included two senators, who have not yet been named, and Verna reportedly wrote to Cobos complaining about their absence, urging the committee to wait until they were incorporated.

At the core of the Central Bank issue is the Bicentennial Fund account that Mrs. Kirchner created by decree to pay debts by tapping reserves, and which will have to be debated in Congress. The opposition has vowed to reject it.

However, to revert a decree it needs two thirds of the votes in each of the Houses, a figure that is seems far from getting. Although it obtained 70 percent of the votes in June, it is widely dispersed and divided.

The Fund is being backed by Victory Front and also some opposition governors, in the hope to get financial aid.

Spearheading the support is Chaco Kirchnerist Governor Jorge Capitanich, who engaged in a tough dispute with Chubut Governor Mario Das Neves.

Capitanich said that the government's policies to cumulate reserves have allowed Argentina to brave the consequences of the global crisis and that the Bicentennial Fund will help provinces to finance public works.

"I am thankful to the national administration. The model it has implemented has allowed the country to have a competitive exchange rate, to create jobs and to launch the subsidy for children. In the face of an undue meddling of courts and the stubborn stance of Redrado, the government has been forced to make some necessary decisions."

But the dissident Peronist Das Neves rebuked him by saying: "I will be not bought up with a lollipop, that is, public works.

"It is a lie that part of those funds will be shared with the provinces. This is an extortive manoeuvre. The government owes my province more than 300 million pesos since more than a year ago."

He also criticized Mrs. Kirchner for issuing the Bicentennial Fund decree only days after Congress adjourned sessions until March.

Das Neves said that the provinces' financial problems could be solved by means of sharing cheque tax revenue. "The shared revenue has been declining to the point that today it doesn't even reach 30 percent. That pushes many provinces into incurring debts. Sharing the cheque tax would be much easier (than resorting to the Fund). Only in 2010 provinces would get 8.7 billion pesos. It would be an automatic transfer and we would not be subjected to the discrimination of the 'friend-enemy philosophy' applied by the national administration."

Chubut deputies Manuel Morej n and Oscar Curril n and Senator Graciela Di Perna will vote against the Fund in Congress, he said.

Das Neves has launched his presidential bid for 2011 and says that he is ready to challenge in a primary ex-president N stor Kirchner, who chairs the Peronist party.

Felipe Sol , who heads the dissident Federal Peronism caucus in the Lower House, said that governors should not trust the national administration promises. "Poor governors those who think that the louder they shout their allegiance to the Kirchners the sooner they will get the funds. There is a colonization policy toward the provinces."

Provinces should get "genuine funds" by means of the sharing of the cheque tax revenue and income tax, he said.

He added that the budget voted in November is "a fake" because it envisages that total spending this year will be 10 percent higher than in 2009 , but inflation will be at least of 18 to 20 percent. "This means that the government is planning a phenomenal adjustment against public servants, against the people, against those who use the health and education services."

San Juan Kirchnerist Governor defended the Fund criticizing those who "place stumbling blocks in the way."

The government said that reserves stand at 48 billion dollars and the monetary base is 30 billion and that, as a consequence, it can freely dispose of the balance 18 billion to pay debts. But the opposition distrusts those figures, and also says that tapping reserves would weaken the backing for the peso and spark growing inflation.

Entre R os Victory Front Senator Blanca Osuna , talking to the Herald, defended Marc del Pont and the Fund.

"Marc del Pont has shown great ability at the helm of Banco Naci n and gave strong support to production and provinces.

"The Fund aims to foster more certainty, foreseeability and stability for the nation, the provinces and the production sectors, and ensure sustained growth to make the country less vulnerable to international crises. Those who oppose it were those who implemented policies playing into the hands of financial interests that led to a fall in reserves, speculation and indebtedness. We will debate in Congress how to put the financial system at the service of production and work."

The Argentine economy in late 2001 suffered its worst-ever meltdown.

The Fund is not just being backed by Victory Front leaders. Some opposition governors support it as well, among them Santa Fe Socialist Governor Hermes Binner, C rdoba dissident Peronist Juan Schiaretti and Corrientes Kirchnerist-Radical Governor Ricardo Colombi.

Binner said that reserves should not be channeled to pay debts, although he added that the national administration has "the right" to implement the Fund for other purposes.

Regarding a possible Socialist support to the decree that created the Fund, he said: "They have no requested me (a green light) for that. Our caucus does not oppose everything. It makes proposals and contributes to all issues that we consider to be positive. That is the difference between us and the rest." He also said: "Regarding the autonomy of the Central Bank we also have a different view. We believe that there is a party that won the elections and hence has the right to govern."

Civic Coalition leader Elisa Carri harshly criticized him.

"How can a governor possibly be willing that his people becomes more poor? That is what I ask Binner. He cannot support this. I trust that Socialists, both in the Lower House and the Senate and who are excellent people, people of principles, don't allow themselves to be dragged by an accord between Hermes Binner and Cristina Kirchner."

C rdoba's Schiaretti said: "Reserves belong to the whole people, not just to the government, and if the Fund is created it must envisage provinces' debts, because the national government has to pay 2.5 billion dollars, but C rdoba has to pay 90 billion dollars."

Corrientes' Colombi said: "The Bicentennial Fund is more efficient, from the economic and financial point of view, than other alternatives. The return to the capital market drives down the interest rate that the government pays, and that sets the threshold for the private sector. It also prevents a scenario of higher inflation, provided that it is used with prudence, something that can be attained by incorporating reserves to the budget."

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