Argentina: Argentina on track for IMF censure
January 14, 2013
Argentina could become the first country ever to be censured by the International Monetary Fund for not supplying accurate economic data, as authorities have failed to meet a three-month deadline set by the IMF in September for improving the quality of the country's data. On 17 December, Managing Director Christine Lagarde delivered a report to the Fund's board which may result in a declaration of censure by the end of January. The process may be followed by sanctions if the adoption of remedial measures is delayed further, which could include the ineligibility to use the IMF's resources, the suspension of the voting rights and the possibility of a "compulsory withdrawal".
Official economic data and, in particular, inflation data published by the National Statistics Institute (INDEC) have been met with suspicion ever since a controversial methodological change was implemented in 2008. As a result, private sector analysts report their own independent inflation estimates, which differ notably from the official figures. The government has repeatedly denied allegations that INDEC data are manipulated and, in March 2011, went a step further by fining a number of consulting firms for publishing their inflation estimates.
According to official figures, consumer prices for the Great Buenos Aires area added 1.0% over the previous month in December, which was slightly up from the 0.9% rise recorded in November. The monthly increase was driven by higher prices for transport and communications as well as for healthcare. As a result of the monthly rise, annual headline inflation picked up from 10.6% in November to 10.8% in December, marking the highest level in two years. In addition, the year-end 2012 reading was above the 9.5% recorded at the end of 2011.
However, according to the so-called "Congress Index" (IPC-Congreso) - a monthly inflation estimate based on the analysis of various private consulting firms elaborated by a group of opposition lawmakers - consumer prices increased 2.1% over the previous month in December, down from the 1.8% recorded in November. As a result, inflation ended the year at 25.6%, up from the 22.8% recorded at the end of 2011 and marking the highest reading since non-official inflation records began.
Consumers share private analysts' more realistic inflation assessments. According to a Universidad Torcuato di Tella (UTDT) survey conducted in December, households believe that consumer prices will increase 30% over the next 12 months, unchanged from the result reported in November.
Author: Armando Ciccarelli, Head of Data Solutions