BUENOS AIRES (Dow Jones)--The board of Argentina's Central Bank on Thursday approved the transfer to the Treasury of 3 billion pesos (763 million) of income booked in 2009. The transfer is the second so far this year involving paper profits made due to the peso's depreciation in 2009. In February, the Central Bank transferred ARS1.5 billion to the Economy Ministry.
In 2009, the Central Bank booked ARS23.5 billion in profits as the peso slid relative to the dollar. A large share of that will be handed over to the Economy Ministry for government spending this year, although a Central Bank spokesman said that the total amount had not been determined yet.
"Month by month the amount to be transferred will be agreed with the Central Bank," the spokesman said.
The government has increasingly relied on the Central Bank for financing this year amid heavy spending and the continued inability to tap overseas bond markets due to the 2001 default and disputes with the holders of defaulted debt.
Plans to tap reserves for debt payments generated stiff resistance from the opposition-led Congress, which says it must approve such transfers.
The dispute started in December, when President Cristina Fernandez signed a decree ordering the bank to lend $6.6 billion in reserves to the Treasury to make debt payments due in 2010. The funds were loaned for 10 years at a low interest rate. At the time, reserves totaled about $48 billion.
But the president's order to transfer the funds for debt payments became embroiled in Congress and the courts. The president of the central bank at the time, Martin Redrado, had wavered at handing over the funds.
Fernandez then replaced him with a close ally, Mercedes Marco del Pont, and caught Congress off guard by revoking the decree and issuing two more that largely achieved the same purpose. By the time Fernandez had announced her plans, Marco del Pont had already transferred the reserves.
-By Shane Romig, Dow Jones Newswires; 54-11-4103-6738; This e-mail address is being protected from spambots. You need JavaScript enabled to view it
(Alberto Messer contributed to this article.)
Source: http://online.wsj.com/article/BT-CO-20100729-725110.html
