Bloomberg News

Fernandez Regains Control of Congress, Seeks Budget Approval

October 25, 2011

(Updates to add estimate on official vote count in fifth paragraph.)

Oct. 25 (Bloomberg) -- Argentine President Cristina Fernandez de Kirchner will regain control of Congress after winning a landslide re-election, paving the way for approval of next year’s budget and a limit on ownership of rural land by foreigners, analysts said.

Fernandez’s Victory Front coalition and its allies will have 38 to 40 seats in the 72-member Senate and 131 to 140 lawmakers in the 257-member lower house, according to estimates by pollster Rosendo Fraga at Nueva Mayoria and political analyst Daniel Kerner at the Eurasia Group. The new Congress will be sworn in Dec. 10, the same day as Fernandez’s inauguration.

The 58-year-old president, who won 54 percent of the votes in the Oct. 23 national election, lost her majority in Congress in 2009 following a showdown a year earlier with farmers over a plan to increase export taxes. Before the vote she called on Congress to pass her 2012 budget, which seeks to use $5.7 billion in shrinking central bank reserves to pay debt, as well as legislation limiting foreign purchases of rural land.

“The overwhelming victory makes the government more solid and means it won’t need to rely on other political forces,” said Guillermo Schamis, a political analyst at CEOP Opinion Publica in Buenos Aires. “They are convinced that they shouldn’t change their economic policies, though they may try to solve some pending issues such as inflation.”

Final Vote Count

The exact number of lawmakers that each party will have will be released in about a month, after electoral authorities certify an official count on a precinct-by-precinct basis.

Without a 2011 budget in place, Fernandez has used decree powers to shift spending among different ministries based on a budget approved for the 2010 calendar year. When Congress failed to approve her nomination of Mercedes Marco del Pont to head the central bank last year, she appointed her to the post in an interim capacity.

Central bank reserves have tumbled 8.3 percent this year to $47.8 billion as the government tapped savings to pay debt and defend the peso, while countries from Brazil to Mexico boosted savings. The currency has tumbled 6.1 percent this year compared with 8.4 percent for the Mexican peso and a gain of 3.3 percent for the Peruvian sol.

--Editors: Bill Faries, Richard Jarvie

To contact the reporter on this story: Eliana Raszewski in Buenos Aires at eraszewski@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net


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