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UPDATE 3-Argentine budget delayed but gov't has wiggle room
* Lawmakers send bill back to committee for revision
* Government plans to extend 2010 budget if bill blocked
* Bill calls for $7.5 bln in foreign reserves to pay debt
* President could issue decree to tap reserves (Rewrites first paragraph, adds cabinet chief's comments, impact on bonds)
By Eduardo Garcia and Hilary Burke
BUENOS AIRES, Nov 11 (Reuters) - Argentine lawmakers postponed a vote on Thursday on the government's 2011 budget bill, but defiant officials said President Cristina Fernandez will simply extend this year's framework if the bill stalls.
The delay is a setback for the center-left leader, whose drive to tap up to $7.5 billion in central bank reserves to pay debt would free up more money for social spending ahead of next October's presidential election.
After debating for hours, legislators in the lower house narrowly voted to send the budget bill back to committee to consider changes requested by the opposition.
The current congressional session ends Nov. 30, leaving little time for both houses of Congress to vote on the budget plan. Cabinet Chief Anibal Fernandez said the government would probably not call for additional sessions if the bill stalls.
"What the president will do when the time comes is extend the budget, as the ... law dictates, and we'll continue with the 2010 budget. We have no choice, they've forced us into this," he told local television.
If the 2011 budget is not passed, the government will be able to use decrees to redirect and increase spending.
President Fernandez could also issue a decree to tap foreign currency reserves to repay private creditors, ignoring opposition to the proposal.
Her move to use $4.4 billion in reserves this year sparked a political crisis, but ultimately her political rivals were unable to block the measure . [ID:nN06209372]
The president says it is smarter to repay debts using these funds, as opposed to selling bonds on the market at high rates. But opposition politicians say the plan to tap reserves could further fuel high inflation.
Argentine bonds were trading slightly lower on Thursday in thin volume because of a U.S. market holiday.
"I don't think the budget issue will affect bonds' overall tendency to firm," said Juan Diedrichs, an analyst at Capital Markets Argentina. "Debt prices are responding more these days to global market movement and the rising value of soy."
Bond prices in the grains-exporting country have risen nearly 25 percent since June, reflecting investor appetite for emerging market assets because of rock-bottom U.S. interest rates.
Fernandez lost her congressional majority in a June 2009 midterm election, and opposition leaders have been trying to seize the initiative since, with few concrete results.
They have lambasted the government budget bill, which forecasts inflation at 8.4 percent next year. Private economists predict it will be two to three times higher.
They also criticize the bill's conservative economic growth and tax revenue projections, which would let the government spend "extra" income without congressional oversight, a common practice in recent years. [ID:nN16110959]
"(The budget bill) is a sham ... Revenue is underestimated and there will be excess income because the economy grows and above all because there is (high) inflation," Felipe Sola, a lawmaker from a dissident faction within the ruling Peronist party, told local reporters.
Alfonso Prat Gay, an opposition lawmaker and former central bank president, estimated the government has had access to 150 billion pesos (some $37 billion) in "additional" revenue during the last six years because of the budget's erroneous estimates.
Government officials defend the budget's conservative projections, arguing they are being fiscally prudent. (Additional reporting by Karina Grazina and Walter Bianchi; Editing by Padraic Cassidy)
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