The Central Bank will give the Government $ 24,700 million

Profits are equal to 2009 and the Bicentennial Fund, whose creation is a mystery

While awaiting the decision of Justice and Congress in support of the Bicentennial Fund, the Government prepares to use another box, equivalent to that fund, to be funded by increased public spending ahead of elections next year.

These are the utilities that the Central Bank (BCRA) won in 2009, projected at $ 24.700 million? U.S. $ 6.365 billion, according to the retail price of the dollar the day before yesterday?, Quite a sum of around U.S. $ 6569 million in the fund Bicentennial, whose formation caused the biggest political crisis of recent years. "As resources belonging to the Government, be transferred to the Treasury," said a senior source in the Economy Ministry.

The economy minister, Amado Boudou, defended, in conversation with La Nacion, the legitimacy of this huge movement of funds, which dramatically shrinking in the gain of the BCRA, key support financial stability of a country.

In that sense, Boudou rule out quasi-fiscal deficit can be generated to the governing body of monetary policy and financial system. "What caused quasi-fiscal deficit was the tendering strategy and Nobac Lebac [words] for the management of Martin Redrado, with high interest rates, the economy minister said.
Instead, according to the minister, from changes in the leadership of the Central, the new procurement policy maintains the objective of sterilization of money, but at a lower cost than in the past.

The BCRA to transfer profits to the government are essentially accounting profit last year, corresponding to the rise in government bonds which the Central Bank has in its portfolio and improving the value of the exchange rate.

In 2008, the entity that now presides Mercedes Marco del Pont had already transferred money to the Treasury by this concept, but the controversy was amplified last year earnings because it was "little genuine", as the discussion generated among analysts. The Ministry of Economy negotiated each year the turn of the utilities with the board of Central Bank, after arduous technical discussions when you close the balance of the body, in late March.
In 2008 and 2009, the funds pass was around $ 4500 million annually.

In both cases, it was a relatively small share of the budget surplus, this year, however, would be an amount greater than the total savings projected as the budget. Moreover, the resolution will be easier, as close to Marco del Pont said that "if it asks Economy, there will be no conflict in giving those funds."
About Boudou minister confirmed the strategy, beyond the fate of the Bicentennial Fund in court or in Congress in the coming days. The controversy over the transfer of all of Central Bank profits to the Treasury can be summarized in two central elements:

l The implementation of the Bicentennial Fund would generate, as warned Redrado, the issuance of $ 25.000 million to finance current and capital expenditure, by freeing budgetary resources previously earmarked for repaying debt. This would add a similar amount by the Central Bank's profits and thus would add to the current monetary circulation approximately $ 50,000 million that would put pressure on prices. The figure seems even more significant if one considers that the total monetary base is about 115,000 million pesos.

l Unlike the Bicentennial Fund, which had run into trouble in the courts (at least so far) and which parliamentary approval is in doubt, the appropriation of profits for the Government will be automatic if the BCRA does not express any resistance. In fact, the new leadership confirmed its agreement with the strategy of injecting more money to expand their utmost activity level.For Néstor Kirchner, it means to grow nearly 7% in 2010, even with the inflation risk which means as investment, as government's own admission, does not grow since last year.

Now President Cristina Kirchner called on businessmen, the president of the BCRA and the Minister of Industry, Debora Giorgi, began meeting with various sectors and Boudou defends the Bicentennial Fund and debt swaps as tools to restore private sector confidence. But paradoxically, if the Government has its way, inflation topped up, provided by 20 to 25 percent by 2010.

"When an investment starts, implies an increase in inflationary pressures by increasing aggregate demand. After a few years, increasing productive capacity, that demand and supply becomes able to reduce the pressure on prices," warned an economist . Beyond inflation risk, the political decision to capture all profits are taken while the Central Bank faced more bad news: after a positive fourth quarter in 2009, in January and February resumed capital flight.
In January, according to numbers that are handled in reserve reached U.S. $ 1000 million, offset by a similar trade surplus in February, and is projected at U.S. $ 1500 million. Since 2007, the net capital outflow was U.S. $ 47.000 million.