Argentine president fires central bank chief

admin Contributor
Font Size:

BUENOS AIRES (AP) — President Cristina Fernandez fired Argentina’s central bank chief Thursday after he refused to step down in a dispute over whether the country’s international reserves should be used to pay debt.

An emergency decree signed by Fernandez and her Cabinet, and distributed by government news agency Telam, said Martin Redrado would be removed from the post for misconduct and dereliction of duties because he “failed to fulfill the duties of a public servant.”

“The decision was made because the central bank must keep functioning,” Fernandez told reporters later Thursday.

Redrado angered the president by refusing to comply with an order to use about $6.6 billion in reserves to help cover $13 billion in international debt falling due this year. He had said he would wait for Congress to ratify the measure. Opposition lawmakers accused Fernandez of violating the bank’s autonomy by ordering it to use reserves to pay the debt.

Fernandez asked Redrado to resign on Wednesday but he refused, setting up a standoff that rattled financial markets. Thursday’s firing was announced after Argentina’s stock market closed.

The decree also urges prosecutors to seek unspecified “legal measures” against Redrado.

The former bank chief’s spokesman did not immediately respond to messages left on his cell phone seeking comment.

Fernandez’s government named central bank vice president Miguel Pesce — who has opposed Redrado’s stance on using the reserves to cover debt — to take over the institution on an interim basis, according to TN news channel.

Constitutional law professor Andres Gil called Redrado’s firing unconstitutional, saying the bank chief’s ouster should first be recommended by Congress.

“He is not just a (Cabinet) minister whom the president can decide to fire,” said Andres Gil, who teaches constitutional law at Buenos Aires University.

He added that emergency decrees “are tools that should be used only exceptionally — and in this case, it would seem the president is rather obeying a desire or a political objective, which is to control those reserves.”

Fernandez’s government argued that since it is ultimately the president’s decision, skipping congressional action and firing Redrado directly was legal.

“There is no conflict of powers,” Economy Minister Amado Boudou said.

Fernandez’s administration says it is trying to clear up the country’s debt problems so that it can return to international credit markets that have been closed to it since a 2001 default on debt payments.

In 2005 Argentina restructured its debt, forcing investors to accept steep losses. About a quarter of bondholders rejected the offer and some sued Argentina, trying to recover the full value of their bonds. The lawsuits have blocked Argentina from returning to global markets.

The government is currently trying to work out a deal with those debt-holders.

But the opposition and some analysts dispute whether Fernandez can legally fire Redrado and say she is undermining central bank independence.

“According to the central bank’s original charter, which is a law, this body is independent of the executive power. That is, it doesn’t take orders from (the executive) nor are its employees part of the government. Therefore, the president cannot seek their resignations,” said Aldo Abram, director of private economic think tank the Center for Investigating Institutions and Markets of Argentina, in a statement.