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Central Bank Officials Resign in Clash Over Economic Policy

August 23, 1986

BUENOS AIRES, Argentina (AP) _ Central Bank President Alfredo Concepcion and eight other top officials of the government’s regulatory bank resigned Friday in a policy clash with Economy Minister Juan Sourrouille.

Concepcion was known to have opposed Sourrouille’s policy of a monetary squeeze to control inflation.

Juan Ignacio Lopez, the spokesman for President Raul Alfonsin, announced the resignations of Concepcion; the bank’s first vice president, Leopoldo Portnoy; the second vice president, Alberto Pombo, five members of the board of directors and a trustee.

Lopez, who declined to comment on the reason for the resignations, said Concepcion will be replaced by Jose Luis Machinea, the Economy Ministry’s subsecretary of policy.

Concepcion, in an interview with Radio Rivadavia, said Sourrouille had refused to approve two nominees for the bank’s board of directors who he and Portnoy had backed.

Concepcion and those who resigned with him had argued that a policy of monetary expansion, with low interest rates, was needed to spur the stagnant economy.

Sourrouille also has been criticized by some members of President Raul Alfonsin’s Radical Civic Unionwho consider the Harvard-educated economist a technocrat with policies that run counter to the party’s center-left platform.

Economy Ministry officials recently blamed the Central Bank for an increase in inflation, which went to a monthly rate of 6.8 percent in July after running at 3 or 4 percent earlier in the year. Projections for August exceed 7 percent.

The ministry officials noted specifically rediscounts approved by the Central Bank for private banks and companies in financial difficulties.

Central Bank officials were angered by the ministry’s statements and prepared a confidential report, leaked to the local press, that said the rediscounts did not result in a significant monetary expansion.

Concepcion also has strayed from Sourrouille’s position of trying to strictly meet obligations on the country’s $50 billion foreign debt.

On Tuesday, Concepcion said current Latin American debt agreements were impossible to comply with and he expressed solidarity with Peru. Last week the International Monetary Fund declared Peru would be ineligible for new loans because of its failure to make foreign debt payments.

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