President Cristina Fernández with Martín Redrado and Brazil's Henrique Campos Meireles. Source: Wikimedia Commons

Argentine President, Christina Fernández de Kirchner, has fired Martin Redrado from his role as Argentine central bank governor, after he refused to transfer $6.5 billion of currency reserves to pay off foreign debt. President Fernández cited misconduct and dereliction of duties in a decree dismissing him, reported the BBC.

According to the BBC, the decree may be illegal, as the central bank chief can only be removed by Congress. A spokesman for Redrado said that he has agreed to step aside but not step down, and he will fight back with a legal challenge.

The Buenos Aires Herald reported that as Redrado left the Central Bank’s premises, he said he was “satisfied by his achievements and for having protected the institution’s values.”

“I’m certain we leave an agency that provides monetary certainty, currency exchange predictability, and financial stability to every Argentine,” he concluded.

The Financial Times reported that the government’s claims that a transfer of $17 billion in “excess” to a special fund created by the president to pay off debt is a rational use of cash accumulated through its policies in recent years. The government also stated that the transfer will prove cheaper than borrowing and would reassure international markets of its willingness to pay its debts and avoid any new default.

Argentina has $13 billion of international debt that matures this year. The BBC’s Candace Piette, in Buenos Aires, said that economic analysts believe the attempt to sack Redrado shows the Argentine government’s desperation to acquire funds to pay debt – a bad sign for a country seeking more foreign investors.

Analysts said the furious reaction of Fernández, whose approval rating has slumped to about 19 per cent, suggested she had never thought Redrado would defy her; Fernández has been largely used to getting her own way, The Financial Times said.

The Wall Street Journal reported that behind the dispute is a battle over the administration’s efforts to secure new sources of cash to maintain high public spending. According to The Financial Times, Fernando de Narváez, an opposition congressman, criticized the situation as “an unnecessary, capricious and dangerous crisis” and said the government “is spending too much and now wants to put its hands in the till.”