Judge blocks Argentine president’s bid to fire Central Bank chief

Judge blocks bid to fire Argentine bank chief

BUENOS AIRES, Argentina — A judge reinstated Argentina’s Central Bank chief on Friday, a day after President Cristina Fernandez fired him by emergency decree in a bitter fight over control of the bank’s reserves.

Martin Redrado returned to the central bank shortly after the ruling, which suspended the decree that dismissed him for dereliction of duty. He had angered Fernandez by refusing an order to use reserves to pay off debt and then rejecting her demand that he resign, saying only Congress has the power to remove him.

Earlier Friday, the same federal judge, Maria Jose Sarmiento, blocked Fernandez’s plan to tap the autonomous bank’s reserves and suspended her order until lawmakers consider the proposal.

The standoff between the Central Bank chief and president has rattled Argentina’s financial markets and led to opposition charges that the government is seeking to undermine the bank’s autonomy.

Interior Minister Florencio Randazzo said the government would appeal the ruling on the use of reserves, telling Radio 10 that the constitution gives it the right to issue its emergency decree.

There was no immediate official reaction to the decision reinstating Redrado.

Fernandez is seeking to tap about $6.6 billion in reserves to help cover $13 billion in international debt falling due this year. The plan would create a special debt-payment fund from Central Bank reserves currently totaling nearly $48 billion.

Fernandez defended the measure at a public appearance Friday, saying it would keep Argentina from paying “fat profits” to speculators.

“It’s much better to use the reserves than to borrow at interest rates of 15 or 14 percent, when the reserves are barely earning 0.5 or 1 percent,” she said.

Redrado was fired on Thursday after he refused to comply with that plan, saying he would wait for Congress to ratify the measure when it returns to session in March.

Analysts immediately questioned whether Fernandez could fire the head of the autonomous Central Bank, saying such a move must first go through Congress.

And Sarmiento agreed, ruling that under to the Central Bank’s charter, the president has the power to remove its chief only with a previous recommendation from lawmakers — not by fiat.

In her other decision, on the government measure seeking control of the reserves, the judge found that since the economic effects of the debt payoffs would be medium- and long-term, Fernandez was not justified in bypassing Congress with an emergency decree.

Miguel Pesce, who was named interim bank chief by the government, did not comment to reporters as he entered the institution’s offices on Friday.

Vice President and Senate chief Julio Cobos convened political party leaders to analyze the legality of the presidential decrees — a potential first step toward a special summer session by a Congress in recess. Cobos has a rocky relationship with Fernandez after helping defeat a proposed export tax on grains last year.

Argentina’s main Merval stock index closed down about 1.5 percent Friday. The peso was stable against the U.S. dollar.