American judge freezes Argentina government account held at US Federal Reserve

American judge freezes Argentina account in US

BUENOS AIRES, Argentina — An American judge has frozen a government account that Argentina’s central bank holds with the U.S. Federal Reserve, a top Argentina official said Tuesday.

Argentine Economy Minister Amado Boudou made the announcement amid a fight over whether the government of President Cristina Fernandez can tap central bank reserves to pay off national debt.

An Argentine judge is deciding that question after Fernandez was blocked from firing the central bank president for refusing her access to the bank’s multibillion-dollar reserves.

Boudou said that U.S. District Judge Thomas Griesa in New York froze $1.7 million in the account but that the amount frozen could reach $15 million.

He speculated the decision came at the request of creditors demanding payment on $20 billion-plus in interest, following Argentina’s 2001 default on about $95 billion in bonds.

Boudou said Argentines should not worry about the impact of the judge’s decision on Argentina’s delicate economy because the amount frozen was relatively small.

Last week, an Argentine federal judge overturned Fernandez’s attempt to remove the central bank president, Martin Redrado, in their fight over using the bank’s reserves.

On Monday, federal judge Maria Jose Sarmiento said she could take all the time needed to resolve the legality of the president’s suspended emergency decrees. Congress will likely consider the matter in March after its recess.

The extended delay is a setback for Fernandez, who has questioned the validity of the judge’s rulings and said it was important for Argentina to emerge from default.

Argentina has Latin America’s third largest economy, after Brazil and Mexico.