The IMF Has Put Argentina On The Road To The Worst Punishment It Can Possibly Give
This story goes back to 2007, when late Argentine President Nestor Kirchner fired the statisticians in INDEC (the Argentine Bureau of Statistics) and replaced them. Since then the country has reported inflation numbers that differ wildly from those of independant analysts — a difference of 10% versus 25% (check out some charts on that here).
To keep up this charade, the government has fined statisticians that release numbers that contradict INDEC's. To current president Cristina Fernandez de Kirchner's administration, these people are criminals.
And the IMF is tired of this. At the end of last year the body's Executive Board discussed what they would do with the country. Last night they made an official decision. Argentina must change its ways or join Czechoslovakia as the only countries to ever be forced out of the IMF and lose the funding that comes with that. Argentina could also lose its status as a G20 country.
Here's the release from the IMF:
The IMF’s Executive Board met on February 1, 2013 to consider the Managing Director’s report on Argentina’s progress in implementing remedial measures to address the quality of the official data reported to the Fund for the Consumer Price Index for Greater Buenos Aires (CPI-GBA) and Gross Domestic Product (GDP).
The Executive Board found that Argentina’s progress in implementing the remedial measures since the September 17, 2012 Board meeting (see Press Release No. 12/319) has not been sufficient. As a result, the Fund has issued a declaration of censure against Argentina in connection with its breach of obligation to the Fund under the Articles of Agreement.
The Board called on Argentina to adopt the remedial measures to address the inaccuracy of CPI-GBA and GDP data without further delay, and in any event, no later than September 29, 2013. The measures applicable to the CPI-GBA and GDP aim at aligning these indicators with the international statistical understandings and guidelines that ensure accurate measurement.
The Managing Director is required to report to the Executive Board by November 13, 2013 on the status of Argentina’s implementation of the above remedial measures. At that time, the Executive Board will again review this issue and Argentina’s response in line with IMF procedures.
The Fund stands ready to continue its dialogue with the Argentine authorities to improve the quality of the official CPI-GBA and GDP data, and, more generally, to strengthen the relationship between Argentina and the Fund.
The Kirchner administration is, as ever, defiant. They continue to insist that the IMF is out of line and released this communique in response to the ruling requesting a meeting with the IMF to discuss it (Telam reports).
...Economy Minister Hernán Lorenzino said that the latest International Monetary Fund (IMF) criticism to Argentina´s statistical system “is a clear example of unequal treatment and of double standard” on the part of the monetary institution in its relationship with some of its member countries.
The Argentine Government requested “an extraordinary meeting of the Board of Governors of the IMF, to review its policy towards our country as well as its performance and responsibility in the world economic and financial crisis”, said the Ministry´s communiqueé.
It also reminded that “Argentina is the same country that in the nineties, during the convertibility system, was presented by the IMF as the best example of an economic model, which wound up in the most serious institutional and economic crisis in the history of our nation”.
"Such a stand regarding Argentina is not only an error on the part of the IMF, but also a clear example of an unequal treatment and double standard of this organism in its relationship with certain member countries. It is the same Fund that shows complacency towards inaccurate facts and policies that led to the global crisis. An IMF that despite being aware that its recipes do not work, does not repent from its prescriptions”, remarked the Ministry of Economy.
Cristina Fernandez de Kirchner is not known for standing down. She is not known for changing her mind. She is not known for accepting the measures of international agencies that she considers harmful to her country's interest.
Expect a fight.