Reuters International

Argentine's President Mauricio Macri reviews an honor guard before meeting with his Brazilian counterpart Michel Temer at the Planalto Palace in Brasilia, Brazil February 7, 2017. REUTERS/Adriano Machado

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By Luc Cohen

BUENOS AIRES (Reuters) - A prosecutor asked to investigate Argentine President Mauricio Macri on Tuesday over a deal to resolve debt the country's postal service incurred with the government when it was owned by Macri's father.

A judge will decide whether or not to open an investigation, which could hurt centre-right Macri's party in congressional elections later this year.

Earlier on Tuesday, Cabinet Chief Marcos Peña asked for an independent audit of the deal to resolve the debt and denied any wrongdoing by Macri's government.

The deal, reached last year, has prompted conflict-of-interest allegations after a different prosecutor asked a court last week to block the agreement, calling it a "forgiveness of debt" that benefited the president's family.

"We believe this is an extra assurance, because we are absolutely committed to transparent government," said Peña, who also said the federal judiciary should name an independent panel of experts to recommend a solution.

A spokesman for the National Auditor General said it does not report to the executive branch and only opens investigations when requested by congress. The auditor's leader is chosen by the largest opposition bloc in congress.

The case stems back to 1997, when then-President Carlos Menem privatised the country's postal service. Control of the service went to Grupo Macri, a conglomerate owned by real estate magnate Franco Macri, the current president's father and one of Argentina's richest men.

Former President Nestor Kirchner, who rose to power after the country's financial crisis and 2002 debt default that plunged millions of Argentines into poverty, re-nationalized the postal service in 2003. The company had declared bankruptcy in 2001, and owed 296 million pesos to the Argentine government.

The debt was worth $296 million in 2001, but today is valued at $19.1 million.

Kirchner's successor and wife, former President Cristina Fernandez, never succeeded in reaching a deal on the debt. Months after taking office in December 2015, Macri's administration struck an agreement to allow the company to repay it over 15 years at 7 percent interest.

Prosecutor Gabriela Boquin said these terms were overly generous, given that more than a decade of rampant inflation and devaluation had eroded the peso's value, resulting in a substantial loss to the state in real terms.

Peña said Mauricio Macri had not been involved in the debt deal. Prosecutor Juan Pedro Zoni asked to open an investigation into the president and his communications minister.

(Reporting by Luc Cohen; Editing by Dan Grebler and Bill Rigby)

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