The Argentine government appealed Saturday a court ruling to reinstate the central bank chief a day after President Cristina Kirchner ordered him removed in a brewing crisis over external debt payments. Federal Judge Maria Jose Sarmiento temporarily suspended the government decree allowing the use of central bank reserves to pay down the national debt and called for central bank boss Martin Redrado to be reinstated. Sarmiento, who denounced the presence of a police vehicle outside his home as “abnormal” pressure, refused to hear the appeals over the weekend, saying he has no jurisdiction outside of his office. “The court of appeals says the issue cannot wait,” cabinet chief Anibal Fernandez told C5N television. Kirchner dismissed Redrado Thursday over his refusal to release $6.59 billion from the central bank's reserves to pay down national debt due to mature this year, in a bid to return Argentina to international credit markets. He was replaced by central bank vice president Miguel Pesce, who was given provisional control of the bank. Analysts have warned of a showdown between the government and opposition lawmakers who back Redrado could hit the country's fragile economy. Argentine bonds sank on Friday on news of a deepening crisis, as local investors sought better returns for increased risk, raising the cost of borrowing. Argentina's economy — Latin America's third largest — is still struggling to recover from a massive default in 2001, which left the country's finances decimated and choked access to international credit markets. Kirchner's administration appealed the judge's two rulings, but Sarmiento can still reject the request, which would pave the way for the case to reach the Supreme Court. “I'm very calm, convinced that I fulfilled my mission to protect the savings of all Argentines,” Redrado said Friday in rejecting the government's arguments to dismiss him. He said he intended to finish his six-year term expiring in September “because in its 75-year history, the central bank has had 55 presidents. That makes the Argentine system unstable.” Vice President Julio Cobos, head of the Senate and opposition leader, called on Congress to break from its summer recess to discuss the validity of the decrees next week. Redrado became president of the central bank in 2004 under the government of Nestor Kirchner, husband of the current president. Analysts at JP Morgan wrote in a briefing note Friday that Kirchner's decree firing Redrado risked sparking a political spat with a Congress increasingly dominated by the opposition, and which has the power to authorize all use of central bank reserves. The decision could cause a crisis akin to that over plans to raise export taxes in 2008, which led to countrywide protests and widespread rebellion among farmers, they warned. Some warned that attempts by the Argentine government to raise more money through bond issues could also be called into question.
