WASHINGTON (Reuters) - The International Monetary Fund’s board will consider on Friday whether to issue a so-called declaration of censure against Argentina for failing to fix economic data that many consider flawed, bringing the country a step closer to being sanctioned.
The move would be by far the harshest reprimand yet against Argentina for its refusal to address problems with its data. Sanctions would likely follow shortly afterwards, when Argentina stands to lose its voting rights and access to financing.
According to IMF rules, the board could also decide on Friday to issue a statement addressing its concerns and giving Argentina more time to respond.
But strains between the IMF and Argentina have slowly escalated over the government’s refusal to take the necessary steps to improve the quality of the economic data to bring it into line with international standards.
Analysts have accused the government of underreporting inflation since early 2007 for political gain and to reduce payments on its inflation-indexed debt.
Earlier this week the IMF also discussed Argentina’s refusal to participate in the fund’s annual economic assessment for the past 5 years. Tensions with Buenos Aires date back to Argentina’s 2001/02 debt crisis, which then president Nestor Kirchner blamed on IMF policies.
The only country the IMF has forced to leave its ranks was the former Czechoslovakia, which occurred in 1954. Countries like Somalia and Zimbabwe have been sanctioned by the IMF, but mainly because of a failure to repay the fund.
IMF Managing Director Christine Lagarde warned Argentina in September it could be handed a “red card” unless it addressed problems with its data.
IMF spokesman Gerry Rice on Thursday declined to speculate what board officials may decide.
“This is a matter for the board to discuss. I cannot, I will not, try to preempt what their discussion might be,” he told a regular news briefing on Thursday, adding: “This is the first time that the board has reached this point under the present legal framework.”
No one at the Economy Ministry in Buenos Aires could immediately be reached to comment.
Reporting by Lesley Wroughton; Editing by Neil Stempleman