MercoPress. South Atlantic News Agency

IMF begins to work in Argentina in the elaboration of a new cost of living index

Indec chief Ana María Edwin and Director Norberto Itzcovich

International Monetary Fund (IMF) staff arrived Monday at Argentina’s Statistics Bureau, Indec headquarters in Buenos Aires to meet with its chief Ana María Edwin and its Director Norberto Itzcovich and begin the elaboration of a new cost of living index.

The agenda includes the analysis of several technical points of the new consumer price index which is in its development phase. The IMF technical mission -led by economist Carlos Medeiro- arrived Sunday in Argentina.

Indec’s head, Norberto Itzcovich, announced that points to be discussed include determining whether the new index will applied nationwide or will be different for each province, the extension of the pool samples, and the use of seasonal price baskets, among other points.

Furthermore, Itzcovich explained that during the stay in the country, the IMF specialists are planning to visit different provinces.

According to IMF head for the Western Hemisphere Department, Chilean economist Nicolás Eyzaguirre, the IMF staff arrived in the country will prepare ”a report along with INDEC authorities that will include specific recommendations concerning the design and methodology to develop a new Consumers’ Price Index (IPC in Spanish)”.

The results of the on-process development of a new consumer price index (IPC) as well all the world’s loan machinery final recommendations and conclusions will be ready and submitted to the government of President Cristina Isabel Fernández de Kirchner by late April or early May.

An IMF team had also visited the country last December with the clear intention of getting detailed information of the local economy plus testing the financial system so that a new consumer price index could be elaborated along with local authorities.

Many see these visits as an attempt to clear out any doubts that foreign investors might have on regards Argentina’s official inflation index, which is dictated by the Indec by using what many economy experts considered a rigid methodology that has gained nothing but a vote of no confidence as it largely differs from the numbers delivered by private consulting companies.

According to the Indec, the inflation rate increased 10.9% during 2010, while private consultants set it around 25%.

It is worth mentioning that the Indec bureau has been under a fierce political intervention by the Argentine government led by controversial Domestic Trade Secretary, Guillermo Moreno, since January 2007, when its statistics specialist who were not willing to accept the government’s new methodologies to measure and run national statistics since they considered it “fiddling and manipulation” were downgraded or simply forced to leave.

Moreover, in the last weeks Moreno fined several private economic consultancy companies to the tune of 500,000 Pesos (125.000 US dollars) for failing to respond to his measurement survey in time as their economists were given 48 hours to comply with a survey sent to them by the government's official.

Likewise, the Domestic Trade Secretary banned private consulting firms from estimating the inflation rate.

The disbelief surrounding official data has been the topic of criticisms for economists, opposition leaders, foreign investors, multilateral organization and even individual citizens, who protested several times against the “distorted” numbers released by the Indec.

How inflation and poverty –among many other statistics rates and indexes- are measured has been in the centre of the discussion.