Following Friday’s IMF ‘declaration of censure’ on Argentina because of the lack of reliability in its inflation and GDP stats, and the country’s first reaction virtually describing the Fund as mother of all financial evils, Minister of Economy Hernan Lorenzino announced a new ‘national’ Consumers Prices Index to be implemented in the course of this year and which will replace the current GBA-IPC.
“The Fund knows perfectly well that we are involved since 2011/12 in the elaboration of a new CPI. Among other things all the data sources need to be modified and this takes time. And it’s not whether we like it or not, we want to be serious as we have always been” said Lorenzino who also strongly countered the IMF criticisms and questionings.
Lorenzino said that the new CPI, contrary to the current one, will provide price references not only of the Great Buenos Aires but of all the (24) provinces. “A country as vast as Argentina needs indexes which reflect all that is happening in the whole of the country”.
The minister, as with Argentina’s first reaction to IMF sanctions on Friday, said that is was no mere coincidence that the Fund’s sanctions were announced just a few days before the definitive court ruling on the hedge funds’ (‘vulture’ funds) claims and also criticized that the reference invoked by the IMF are the reports from Argentine private consultants and provincial governments, “which lack the technical tools to make the appropriate measurements”.
“We see no coincidence in Friday’s report just a few days away from the 27 February hearing which is going to end the with ‘vulture funds’ issue. The truth is we can’t believe that it is but a coincidence, after seeing in a brief statement with no technical foundation the word ‘corrective’ used 29 times”, underlined the Argentine official.
“The emphasis in these reports is underlining that a country that does not follow the Fund’s instructions is a country to be sanctioned, which must be branded. We are doing things that are not in their interest and must not be released”.
The official Ministry of Economy release on Friday said that IMF sanctions on Argentina had an “exemplary purpose” but also exposing “the unfair and double standard treatment of the organization towards certain members”.
Based on this Argentina formally requests “an extraordinary meeting of the IMF Board of Governors to examine the policy of that body towards Argentina and its role in the origins of the economic and financial world crisis”.
“Strangely enough Argentina is the same country that in the nineties, with the convertibility box, the IMF considered an example of economic model, a model which ended with the most serious institutional and economic crisis in the history of our country”.
The release recalls that the Argentine economy melted in 2001 and the country’s institutions collapsed, Argentina was abandoned by the IMF. “Since then Argentina climbed back without any aid from the IMF and cancelled all its debt with the Fund not to accept its ‘conditionality’”.
Likewise the release compares how Argentina has advanced by not following the IMF prescriptions particularly lowering debt levels and insisting with an industrialization policy, which is seen by the IMF as “a bad example” to be corrected.
“The policy of taking debt proposed by the IMF leads to a vicious circle of social exclusion, bankrupt corporations and disappearance of jobs as is currently happening in several European countries”.
Counter policies on the other hand have allowed Argentina to grow strongly with social inclusion, 6.9% unemployment, double the GDP in ten years, the highest industrial per capita growth in its history, trade surplus and a robust financial system with the most profitable banks in the region, alleges the release.
As to the brief IMF declaration of censure, Argentina asks if the Fund ignores that many countries for example have modified the jobless measurement system and that others have changed several times the composition of the CPI and measurement methodologies in such a way that if the originals were used those indexes would be three times higher?.
Nevertheless Argentina will continue to work as had been agreed with the IMF in the improvement of stats procedures in accordance with international practice.