UPDATE 1-Tight budget vote seen in Argentina’s lower house

* Lawmakers in lower house begin budget debate

* Opposition against use of foreign reserves to pay debt

* Government has broad powers to spend, even without budget
(Updates with start to debate, legislators’ comments)

By Hilary Burke

BUENOS AIRES, Nov 10 (BestGrowthStock) – Argentine lawmakers
started debating the government’s 2011 budget on Wednesday,
with a tight vote expected as opposition legislators dispute
official inflation data and the use of foreign reserves to pay
debt.

The budget earmarks another $7.5 billion in central bank
reserves to pay private creditors, allowing President Cristina
Fernandez to maintain brisk public spending ahead of next
October’s presidential election.

Fernandez’s government says using the funds to repay debts
makes more sense than selling bonds at high rates, but her move
to tap $4.4 billion in reserves earlier this year sparked a
political crisis. [ID:nN06209372]

The budget bill low-balls inflation, forecasting consumer
prices will rise 8.4 percent next year while private economists
predict inflation two to three times higher.

The opposition has also slammed the bill’s conservative
economic growth and tax revenue projections, which allow the
government to spend any “extra” income without congressional
oversight. [ID:nN16110959]

“We will not support a bag full of lies,” said congressman
Fernando “Pino” Solanas, whose leftist Proyecto Sur movement
has submitted its own budget proposal.

Fernandez lost her congressional majority in a June 2009
mid-term election and opposition leaders have tried to seize
the initiative since then, with few concrete results.

Agustin Rossi, head of the ruling party bloc in the lower
house, said the budget will give Fernandez the tools she needs
to govern.

“Never before in Argentina, since Dec. 10, 1983 when we
returned to democracy, has any president been deprived of the
possibility of having a budget,” Rossi told local television.

GOV’T CALLS FOR APPROVAL

Earlier this week, Economy Minister Amado Boudou criticized
the Proyecto Sur budget bill along with another
opposition-backed proposal, saying they would roll back
economic gains made since 2003.

“We ask for rationality and the approval of our budget,” he
told a news conference.

If the 2011 budget is not passed, the government will be
able to extend the 2010 framework and use its broad powers to
continue spending. The government could also issue a decree to
authorize the use of central bank reserves.

“There are constitutional and legal mechanisms that will
undoubtedly allow the government … to continue administering
the country in a serious way,” Boudou said.

If the bill is approved, it will be sent to the Senate for
a vote. Argentina’s government has found it easier to control
the upper house since suffering heavy congressional losses in
last year’s vote.

The budget bill estimates growth in Latin America’s No. 3
economy at a conservative 4.3 percent, down from forecasts for
about 9 percent this year.
(Additional reporting by Guido Nejamkis; Editing by Diane
Craft)

UPDATE 1-Tight budget vote seen in Argentina’s lower house