Argentina hits back at Lagarde: “this is not a football match and we are a sovereign nation”
Argentina's President Cristina Fernandez hit back at the IMF on Tuesday for warning her country about bad stats data, saying her nation is sovereign and would not be subjected to threats of any kind.
IMF Managing Director Christine Lagarde warned Monday that Argentina faces a red card if it does not produce acceptable data on growth and inflation by December. But Cristina Fernandez in a vigorous speech to the UN General Assembly, said: My country is not a football pitch. It is a sovereign nation which makes sovereign decisions.
As such it is not going to be submitted to any pressure, and much less to any threat, she said to cheers from her delegation.
I would like to tell the IMF managing director: this is not a football match. This is an economic and political crisis and the worst one in memory since the (Depression) 1930s.
And since we are comparing football (soccer) with politics and economics, I would like to say that the performance of the head of FIFA has been much better than those of the head of the Fund or the IMF directors,” Kirchner quipped to boisterous applause.
She added I have never heard, despite the world crisis, any self criticism from the IMF, and recalled that in the nineties Argentina was the IMF showcase, (taking money at very high interest rates) but a few years later the whole stage blew to pieces: more precisely in 2001 with the following melting of the economy and default.
“We have restructured 94% of our defaulted debt and paid 35 cents for each dollar, while Enron one of the greatest failures in US corporate history returned one cent per dollar”, said the Argentine president who emphasized that when her husband President Nestor Kirchner took office, the country’s sovereign debt was 160% of GDP, and now stands at 14%”.
“When in 2003 he (President Kirchner) came before this assembly, he asked for time to reorganize and pay back, because ‘dead people don’t pay debts’ and embarked in an inclusion expansion economic policy which allowed Argentina to emerge from disaster” and since then we have honoured, and will keep honouring our debts.
The president recalled that since 2003 Argentina never returned to money markets so the expansion and recovery since then has been done entirely with “our own generated funds”.
Finally she said that it is in the essence of capitalism that if you are paid interest rates several times higher than the going market rate at some point, “you won’t be paid any longer those exorbitant rates and thus if you accepted the benefits, you must also accept the consequences of such risk”.
Last week the IMF officially warned Argentina it could face sanctions in December if it did not move to begin providing more accurate economic data.
If progress has not been made by December 17, the IMF board said it may consider additional steps, without being specific.
Failure to meet IMF rules can lead to sanctions, including suspending a member's voting rights, an extremely rare event which would be a first for a developed G20 country such as Argentina.
The IMF and Argentina have been battling over Buenos Aires's widely questioned official data since 2011, with private sector economists saying the government vastly understates the pace of price rises.
In early September the government released monthly figures that implied an annual inflation rate through August of around 10%. But a group of private economists who average their own estimates and is released through members of the Congressional opposition put the pace of inflation at 24%. A percentage on which trade unions negotiate salary increases and which courts use as a reference when ruling on money disputes.