IMF warn Argentina on ‘lack of progress’ in addressing inflation data
The International Monetary Fund (IMF) warned Argentina about its “lack of progress” in addressing inflation data and called on the country to implement “specific measures” within the next six months to improve it.
“The Executive Board regrets the absence of progress in the adaptation to international statistics standards and took note of the intention of the Argentine authorities to adopt measures to face the quality of the data presented,” the Fund stated in a press release on Wednesday.
However, it does not mention any specific sanctions against Argentina.
The organization insisted on “the obligations of all member countries to provide accurate data to the International Monetary Fund,” which range from inflation to Gross Domestic Product (GDP) levels.
The press release “calls on Argentina to implement specific measures, within a period of 180 days, to address the quality” of its inflation data.
Argentine consumer prices rose 23% last year, the most among the Group of 20 nations, according to opposition lawmakers who base their estimates on reports by economists facing fines of 500,000 Pesos (115.000 US dollars) for questioning the government’s data. The national statistics agency said prices climbed 9.5% in December from a year earlier.
Argentine bonds linked to the official inflation index fell 25% last year as the government fined researchers and failed to implement the recommendations of an IMF report requested by President Cristina Fernandez and submitted in April. Latin American inflation-linked debt fell 0.7% over the same period, according to Barclays Capital.
Norberto Itzcovich, Indec’s technical director, said last September that the methodology used by independent researchers wasn’t of the quality required to accurately measure inflation.
Argentine economists began releasing their own inflation reports in 2007, after then-President Nestor Kirchner changed personnel at the national statistics institute in what he said was a bid to “improve operations.”
In 2010, Cristina Fernandez asked the IMF to help create an index that would reflect current nationwide consumption habits. The government has refused to let the IMF review its finances since 2006, when it paid off its 9.8 billion dollars debt to the lender. The Kirchner ruling couple blamed the IMF for pushing the country into a financial crisis that led to a 2001 default on 95 billion of bonds.
Last month, Gerry Rice, director of the IMF external relations department, said the board wouldn’t apply sanctions against the country for not complying with its recommendations. The IMF board will next meet Sept. 6 to review any changes made by Argentina.
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Argentina does not need to listen to the IMF if it wants to remain a financial pariah. However, your government does want to be part of the financial community again and it has to play by the rules to do so. They know that.
And just for the record, Argentina has been refusing to do what the IMF recommends (policy-wise) since 2003 and it's actually gone pretty well.
So I say why change what is working.
Oh, and no! I, personally, would rather Argentina continue OUTSIDE the int'l financial community as it has done so since 2003.
my two cents
CFK is trying to hold this off as long as possible.
But as I have been saying the wheels are flying off and the only response they have now is PANIC.
Your country has debts and bond holders it has to repay so it cannot continue to lie about the inflation and growth figures. People in Argentina know their government is lying and factor it in but it does not wear well with the world community. Like it or not, your country wants to be part of the larger community and it has to comply. If you want to play the game you have to play by the rules.
I want to add that I have criticised the IMF many times for pulling the rug on an entire country. It was terrible to punish the population for having a feckless government. But Argentina was not an innocent victim.
Why don't you do a little research on failing economies. Every failing economy in recent history has done what CFK is doing now, depreciating the currency, import restrictions, massive tax increases all to the eventual demise of the country. You may not be feeling it personally yet but give it a month or two and you will.
I heard they are now estimating a 4.5B positive trade balance this year, they need a minimum of 10B to make everything work. It may be a very cold winter for you.
BTW how much did your nat gas/electric/Subte, Bus, water, taxes etc etc etc go up this month? I hope you don't work for a provincial gov't and got your paycheck. I heard a lot of them can't pay their salaries this month. Do you think this is a sign of a country doing well?
In the past few weeks there has been a lot of chatter about the GDP # being grossly inaccurate no one was talking about that before. I am not sure who is driving it though. It may be CFK since they don't have the U$ to pay the interest payment this year. I am pretty sure that is why they are driving the economy into recession also.
The problem is they can't bring the 25-30% inflation down to match the 3-4% growth this year. Stagflation could drive them into full blown depression shortly. I think a massive devaluation is right around the corner which will be the final step before total collapse.
I for one while understanding it was severely trying for everyone, am glad Argentina was not bailed out like Mexico, Brazil, Russia, Korea, Turkey, Thailand, Indonesia, in crises prior to 2001, and how European countries have been bailed out since (or the USA itself via China). At least we go back up on our feet and owe that to no one.
It is all collapsing right now.
They can't withdraw the gov't spending all at once without driving the economy into a depression. This year is all about the Soy crop, if it is as bad as everyone thinks you are in for a HUGE downturn in the 3rd quarter, possibly another default and a huge devaluation.
I hope you are having a nice summer because winter is coming.
Sadly, in times of difficulty, the people that suffer are the chronically poor 30-35% that are inveigled into voting again and again for such populists, and are beholden to government assistance. The other 70% enjoys in the winter, either the nice weather in the north or the snow in the west and south... which I'm sure will sorely dissapoint you.
I'm not that enthused with the “social direction” of Argentina, but I certainly support them, if they thumb their noses at the IMF.
Instead of critiquing me do you care to answer any of my questions? Or do my statements stand on their own? I know they are factually correct.
17. How can they be thumbing their nose at the IMF AND asking them in the country? IMF wouldn't be there without the express permission/invitation from CFK.
There are a few CFKC posters on this blog that would swear the sky was purple with pink spots if CFKC said it was. Many of the stronger comments are aimed directly at them.
I am well aware of the agenda of the IMF but it is a reality of life that Argentina needs them on their side. They will borrow again if they can and desperately need to improve their credit rating if the country is ever to enjoy wealth and improved lives for the poorest. Argentina has the capability and the resources but is hopelessly managed at the top.
Nestor was forever demonising the IMF because it suited his agenda to have a common enemy to play the victim in the financial crisis. Argentina was as much to blame in their downfall as anyone else. They were happy to buy the snakeoil when yet another bond trader walzed in with a quick fix solution. (The traders made a mint and Argentina slid further into crisis). A little humility and a small attempt to implement some of the terms of their loans may have stopped the crisis from ever happening.
You may think your country does not need to be part of the world economic community but it does.
How will your countries pay their debts? It's a lot of money and the current austerity is a fraction of what will be required to bring these arrears down in any meaningful measure, so that you do not fall back to the same pecuniary predicament in five years because of high GDP-to-debt fears.
Countries should live within their means. Ideally, they would only borrow occasionally for very strategic infrastructure purposes (those that can pay for themselves), and the rest left to the private sector (though zealously regulated).
It is a fallacy that countries need to have “debt”. The only issuable notion is that perhaps countries do best when they run slight deficits, but I do stress slight. And they should repay the accumulated debt from such deficits periodically to become debt-free again.
Argentina should be part of a global MARKET-economy of free trade and movement of capital and people. It should not be part of an unelected, officialist dreanought that has proven to bring both poor, emerging and now even rich nations to the brink of ruin.
All countries operate on debt and much as I agree with you that too much power is in the hands of unelected financial houses, it is the reality. If I had any say I would curb the activities of the bond traders who are motivated only by profit and have no moral conscience regarding the effect their activities have on entire countries. They should be heavily regulated and they are not.
But in the case of Argentina, they have considerable debts and they must repay them. Instead of thinking of the debts solely in terms of 'the big bad banks', that money Argentina defaulted on was the money of hardworking people invested for their retirements. They suffered, not the banks, when Argentina decided not to pay up.
Instead of being idealistic, the reality is that you have to play the game by the rules if you want to be a player. And CFKC wants to be a player.
I am not disputing your point that Argentina has and continues to mismanage its affairs. It is certainly a fact. My point is, the people of Argentina have allowed themselves to become slaves to the bankers and I would certainly hope they will have the nerve to spit in the bankers' eyes. Of course, that means they need to dump their “party ideology”, sort of like Americans need to dump their two party system, before they can begin to recover.
Seems like all politicians, the world over, have discovered the art of campaigning on the idea of giving out more and more freebies. That's what the voters need to learn how to resist in order to get themselves out from under the thumbs of the bankers.
Specifically, what I mean by that is, all peoples of the world, Argentinians included, need to fully embrace true capitalism, and discover just how much more productive they can be, when the actually receive the rewards for their work. When you spread the wealth at the point of a gun, you will achieve a goal to level the playing field, but it will be at a level of destitution.
Though I have to disagree with you, Argentina's debt load is much lower than the UK's. The defaulted debt is gone, it will never be repaid. Time to move on (as you would surely suggest Argentina do with the Falklands... lead by example?) :)
I feel bad for the small investors, but they should direct their anger at the truant entities that purchased the bonds, as it has been proven beyond any possible doubt since the Argentine crisis that these financial companies have been utterly worthless (pun really intended), in picking wise investments, and in fact connived or colluded in the skullduggery.
I understand your averring that the UK will pay its debts. I am not doubting it will. However, you seem to not grasp the sacrifice that will entail. We are not talking about mere hebdomadal or month long austerity to bring reassurance to the markets and start the cycle of cheap borrowing again (the scenario across the first world in the last 60 years), this will not work anymore. You will rally need to make a great dent on that debt.
It will be excruciatingly painful for the poor, and the young people, for years and years.
Pity really, the train wreck is almost here (again).
It might interest you that by and large people are not complaining. They know what has to be done. I am sure it will wear thin over the coming years but it is also worth remembering that tough times in the UK is a standard of living only dreamed of by a large proportion of the world.
In reference to a comment I saw in the newspaper today by an Argentine minister claiming that the Falklands issue was being used by the UK government to distract the people from proposed welfare cuts..... In fact the majority of people in the UK welcome the reforms. It is right and proper that a civilised country provides such support but for too long a minority have abused the system. It is right that the changes be fully debated so that people who deserve help are not penalised by the changes but ultimately the bill will divert the money where it should be going.
IMF advice has been found to be ill informed not only for Argentina but for others who followed their recipes. They only understand economics from as adjustments.
Now, what I don't understand is why are we talking about a potential crisis in Argentina (which the journal the economist has been now forecasting for 6 or 7 years) rather than talk about the ACTUAL crisis in the USA and other European countries. They don't have potential crisis; they actually have the real thing.
.............................
And Argentina has no sovereignty over the falklands,
so It would be the height of arrogance to impose a blockade,
but you did,,and you still are .
Especially the dark .
.
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