July 12 (Bloomberg) -- Argentine President Nestor Kirchner called on Congress to pass a bill that will grant him power to allocate about $4.5 billion a year without lawmakers' approval.

``I need the law to govern the country, to reallocate funds,'' Kirchner said today at a rally in Buenos Aires Province.

The proposal requires approval from both houses, where Kirchner's coalition holds a majority. The Senate was debating the measure late tnight.

Kirchner, 56, is pushing for the change after increasing government control over the nation's courts, evidence of his ``authoritarian'' tendency, said Juan Lindau, director of the political science department at Colorado College in Colorado Springs, Colorado. Kirchner's approach may rattle investor confidence in the country just five years after the government defaulted on $95 billion of bonds, Lindau said.

``Argentina's legitimacy in international markets is quite fragile and this attitude doesn't help rebuild it,'' said Lindau. ``Kirchner has authoritarian characteristics and very often he seeks to increase his power with the excuse of speeding up decisions. The problem is that these quick decisions may be really wrong ones.''

Argentina's benchmark stock index fell 0.85 percent to 1706.17 at 12:27 p.m. in New York. The yield on the benchmark dollar- denominated bond due 2033 rose to 9.214 percent from 9.118 percent. The price, which moves inversely to the yield, fell 1 cent on the dollar to 89.55, according to JPMorgan Chase & Co.

Since taking office in 2003, Kirchner has issued more presidential decrees, using a total of 201 orders in three years, compared with 545 that former President Carlos Menem signed during a decade in power, according to the Foundation of the Center of Studies of Politics in Buenos Aires.

Govern by Decree

``Even with a majority in the Senate and the Lower House, Kirchner prefers to govern by decree,'' the foundation said in a statement.

Kirchner's government boosted spending by 27 percent in the first five months of the year from a year earlier. Last month, he signed a presidential order to more than double his own salary to about 9,500 pesos ($3,080) per month and raised ministers' wages to about 8,000 pesos per month from 6,000 pesos. The latest legislation would allow Kirchner's government to control about 14 billion pesos per year, said Senator Rodolfo Terragno of the opposition Radical party.

``From a patrimonial standpoint, this situation is similar to that of a dictatorship,'' said Terragno in an interview with Radio Mitre July 11. ``Between these extra powers, the executive decrees the government uses and the discretionary funds it handles, the government manages money at its will. That leads to corruption.'' The Senate is scheduled to vote on the measure tonight, and the lower house may vote as early as July 19.

`Flexibility'

The executive branch needs more ``flexibility'' in budget decisions to adapt to changing circumstances, Cabinet Chief Alberto Fernandez said in the proposal sent to Congress.

The bill says Kirchner would be able to make changes in allocated spending provided they don't violate limits established in the budget law.

Lindau, 51, said the legislation goes beyond efforts by other democratically-elected Latin American leaders, including Venezuelan President Hugo Chavez, to assume control over government funds.

Since 1994 Congress has included provisions in each budget bill that allowed the cabinet chief to modify the annual spending allocations as an extraordinary measure, said Agustin Rossi, the head of the governing party bloc in the lower house of Congress. The bill is no different from previous laws granting the cabinet chief powers to alter the budget, he said.

``The Executive has the responsibility to govern and it shouldn't depend on a majority in Congress to approve changes in a year-old budget,'' Rossi said in a meeting with foreign reporters July 5.

Decrees

Kirchner also is trying to obtain congressional approval to increase its power to govern through executive decrees. Last week the Senate approved a law that said presidential decrees will be valid unless contested by both chambers of congress. The law doesn't impose a deadline for Congress to discuss presidential decrees.

``The approval of these bills will concentrate an excessive and unnecessary amount of power in the president's hands, granting too much discretionary power to the president,'' said Pablo Morra, an economist with Goldman Sachs & Co. in New York, in a July 11 report. ``This is a negative trend, which makes Argentina more unpredictable in terms of policies and risky in terms of rule of law.''

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

Last Updated: July 12, 2006 22:06 EDT