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IMF decision over Argentine statistics manipulation due in January

Bnamericas Published: Tuesday, December 18, 2012
An IMF statement has confirmed that the executive board of the fund will meet in January to consider a report on Argentina's response to its concerns over official inflation and GDP data. "I expect this report will be given due consideration by the Board sometime in late January," said Gerry Rice, director of external relations at the IMF. In September of this year the IMF commented on its concerns related to Argentina's lack of sufficient progress in implementing remedial measures since its meeting in February of this year and expressed its concerns that Argentina has not brought itself into compliance with its obligations under the IMF's articles of agreement. By understating it official inflation rate and thereby overestimating its official GDP numbers, Argentina has short changed bond holders on their interest payments for a number of years. According to press reports, since the changes made five years ago by former President Nestor Kirchner to senior staff at the national institute of statistics ( INDEC) the figure amounts to almost US$7bn on bonds tied to inflation. Earlier this year The Economist magazine decided to drop INDEC's figures entirely from its tables of statistics claiming, "We are tired of being an unwilling party to what appears to be a deliberate attempt to deceive voters and swindle investors." A recent survey of non-government figures by opposition lawmakers, put the annual inflation for the country at 25%, compared to the measure from INDEC of 10.62%. Investment bank, Goldman Sachs expects inflation to remain entrenched above 20% during 2013. SANCTIONS Despite IMF managing director Christine Lagarde's warning of issuing a symbolic red cardto Argentina, it is not clear if the warning carries any real weight. Under Article VIII, Section 5 of the IMF, a declaration of censure may be issued against a country along with a new deadline for implementation that could result in the issuance of a complaint for ineligibility under Article XXVI (a) that will render it ineligible to use the general resources of the Fund. In addition the suspension of the member's voting and related rights and the compulsory withdrawal from the IMF are an eventual possibility. For a country that has shut itself from international bond markets and that continues its dispute with the Paris Club as well as other creditors, following its economic crisis in 2001, it is hard to see what a censure or an eventual withdrawal could mean; especially as the can is likely to be kicked down the road in true political style for at least another year. It is easy for the Argentine administration to play this as another act of colonialism especially so as it continues to admonish the IMF for its part in the 2001 collapse. However it is difficult to see what benefit the administration hopes to gain for the country from the manipulation of its own statistical figures in the long run. The Kafkaesque like nature in which it has chased down independent estimators and its insistence despite all evidence to the contrary that inflation is not such a big problem smacks of attempts at short term political survival as opposed to improving the lot of its own people.

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