IMF asks Argentina to clarify inflation figures

by Jude Webber

The International Monetary Fund has asked Argentina's statistical institute, Indec, to clarify inflation data and methodology that has become increasingly contested over the past year.

Private economists and shoppers say rising prices are not reflected in official statistics, but the government denies widespread allegations that it has manipulated the figures in a bid to mask mounting inflation.

The government's internal trade secretary, Guillermo Moreno, who has been in charge of policing price controls, is the subject of an investigation by Argentine federal prosecutors, in response to allegations from opposition senators that data has been tampered with and statistical secrecy violated. Opposition politicians and some Indec workers claim he has orchestrated a year of official intervention and replaced key officials with pliant functionaries.

Mr Moreno's office declined to comment, although the country's cabinet chief last year predicted the case would collapse for lack of evidence.

The issue is a pressing one of credibility for the new government of President Cristina Fernández, who promised on taking office in December that the data would be overhauled and the US's consumer price index methodology copied to dispel doubts.

No such changes have yet been made, and economists say under-reporting inflation data means Argentina is short-changing the holders of 40 per cent of its foreign debt held in inflation-linked bonds. One former Indec chief said that translated into about $500,000 (€344,000, £256,000) for every percentage point of inflation.

They also say other data using inflation as an input – including poverty figures based on the price of a basic basket of goods whose cost is no longer clear – have been muddied.

The IMF, which is due to conduct a review of Argentina's economy, last week asked Indec for clarification of its inflation methodology.

On Monday the fund declined to comment on Indec's response to its queries after Argentine media reported that Indec chief Ana María Edwin refuted every concern raised by the fund. Indec had no immediate comment.

Argentine officials lay much of the blame for the country's 2001-02 debt and devaluation crisis on failed IMF policies in the 1990s, but the government looks likely to need the fund's blessing to renegotiate its $6.2bn debt with the Paris Club of creditor nations.

IMF spokesman Masoud Ahmed last week reiterated points raised by Dominique Strauss-Kahn, managing director, in Buenos Aires in December, saying: "Reliable data on key economic indicators such as inflation are vital to forming solid economic and monetary policy."

In January, Ms Edwin defended official data as "absolutely trustworthy" after dissident Indec workers published their own 2007 inf-lation estimates of between 22.3 per cent and 26.2 per cent – up to four times the official 8.5 per cent rate.

Indec last week reported prices rose 0.9 per cent in January compared with the previous month. Market expectations had been for a rise of up to 1.5 per cent.

"Indec's performance is just a joke. It started as a little lie and it's snowballed," says Eduardo Fracchia, director of the economics department at Argentine business school IAE.

Source: Financial Times

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