The International Monetary Fund will make a compulsory review of Argentina’s economy because of the country’s refusal to allow the multilateral organization to examine its finances since 2006, the Buenos Aires media reported on Wednesday quoting IMF sources.
The Washington-based IMF will report on the situation in Argentina and other member countries that haven’t submitted required annual reviews of economic policies and data, said the media citing IMF officials. For that purpose the IMF will use both official statistics and private estimates to prepare the report.
Under IMF rules, --Article IV more precisely-- all members must admit an annual and mandatory review of the country’s accounts which gives an idea of the economic situation.
Although the review will not be equivalent to the Article IV instrument, the situation of each country member involved will surface. Furthermore the IMF has decided to proceed in the same way regarding the annual financial review of those countries such as Argentina that refuse IMF access to their numbers.
Under last February IMF procedure amendments “whenever an Article IV consultation or a mandatory financial stability assessment for a member has not been concluded within 18 months of the expected deadline for conclusion, staff shall, informally brief Executive Directors on the economic developments and policies of the member or on its financial sector, as applicable”.
Following on the new procedure the IMF Managing Director will address a letter to all those countries that have not complied with Article IV in twelve months. Argentina has been incompliant since 2006.
The IMF will also make public the list of countries transgressors of Article IV, which will include names, last agreed review, the date for the conclusion of the latest review, reasons for the delay and number of days in which the country has been incompliant.
According to the latest stats, nine countries out of the IMF 187 are currently in that condition, among which Argentina, Ecuador and Venezuela, plus countries where security conditions for the staff to travel are not available, such the cases of Syria and Somalia.
IMF says that “bilateral surveillance is mandatory for both the Fund and its members, and all members have an obligation to consult with the Fund for this purpose and the periodic consultations with members on their policies and access to necessary information are essential for effective bilateral surveillance”.
Furthermore, to enable the Fund to effectively conduct multilateral surveillance, bilateral surveillance needs to cover all economies at a reasonable frequency.
However, a few recent cases of severely delayed consultations have underscored the need to better promote timeliness of consultations. The Fund has relied on a cooperative approach to consulting with members, setting consultation deadlines as expectations rather than firm obligations.
“This approach has worked well for most of the membership. Historically, delays in Article IV consultations have generally been relatively short or, in cases of extended delays, for reasons beyond members’ control. However, some recent delays have been unusually long for reasons that are not clearly beyond the members’ control. These cases have prompted calls to address the issue of timeliness, concludes the February decision on “Steps to Address Excessive Delays in the Completion of Article IV Consultations”.