* Argentina says IMF will help redesign inflation index
* Gov't accused of under-reporting inflation since 2007
* Move may signal more moderate line by Fernandez (Updates with Moody's comment, updates markets)
By Hilary Burke
BUENOS AIRES, Nov 23 (Reuters) - Argentina has asked the International Monetary Fund to help revamp its widely discredited inflation data in a surprise about-face by President Cristina Fernandez announced on Tuesday.
Argentina's center-left government has barred the IMF from conducting routine annual evaluations of its economy since 2006, saying the Fund's policy recommendations helped cause the country's devastating 2001-02 economic crisis.
Fernandez last week triumphantly announced Argentina had convinced the Paris Club of creditor nations to negotiate the repayment of some $6.5 billion in defaulted debt without IMF oversight. [ID:nN15139120]
But inflation is seen as her Achilles heel less than a year from the next presidential election, suggesting Tuesday's announcement may be aimed at taking the steam out of opposition criticism over rising prices and official data.
Private economists, politicians and some state statisticians accuse the government of under-reporting inflation since early 2007 for political gain and to reduce payments on inflation-linked debt.
Some analysts said Fernandez may be moving to moderate the hardline stance on the IMF taken by her husband and predecessor, Nestor Kirchner, who died suddenly in October.
Economy Minister Amado Boudou, also a critic of the Fund, said the country would work with the IMF to restore credibility to government data in a clear step toward mending fences.
"We have asked the International Monetary Fund for technical assistance to design, construct and implement a price index on a national level," Boudou told reporters.
He said "quality is lacking in Argentine statistics," something the government has been loathe to recognize. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Inflation Graphic: r.reuters.com/gyp94q
INSTANT VIEW-Argentina seeks IMF help [ID:nN23143375] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Argentina's INDEC statistics agency reported annual inflation of 11.1 percent through October ARECI09, while private estimates hover near 25 percent.
The IMF said it was in touch with Argentine authorities over organizing the technical mission. Previous efforts to team up on the data fell through last year.
"This is an enormous change ... it highlights something that is becoming increasingly evident, which is a marked change of direction in the president's style in the wake of her husband's death," political analyst Graciela Romer said.
Kirchner paid off Argentina's debt to the IMF in 2006, and later said there was "no way in hell" the country would borrow again from the Fund.
Argentine government bonds trading locally over-the-counter reacted positively to the announcement, rebounding from earlier losses to close slightly higher.
Argentina's debt spreads are among the highest in Latin America due to lingering fallout from a $100 billion default and the more-recent fudging of economic data. [ID:nN06131361]
However, ratings agency Moody's said Argentina's decision to revamp its inflation statistics could yield an upgrade.
"Anything that leads to economic data that the market can trust, that will be a very positive credit development for Argentina," Moody's analyst Gabriel Torres told Reuters.
The government made methodological changes to the consumer price index in 2008 but they did not quell criticism. The INDEC also stopped measuring inflation nationwide and focused exclusively on the Greater Buenos Aires metropolitan area.
"The government's excuse is that this new index will have a national scope," said Nicolas Salvatore, coordinator at the Buenos Aires City economic consultancy.
Norberto Itzcovich, the INDEC's technical director, said IMF officials would visit Argentina in early to mid-December, adding that technical conversations with the IMF had been going on for three years.
Asked if a revamp of the inflation index would affect past data, INDEC's director Ana Maria Edwin said "you never revise an index retroactively."
An admission that Argentina lied about inflation could prompt lawsuits by holders of inflation-indexed bonds.
The officials made no mention on the long-delayed Article IV economic review, which the IMF conducts with each of its 186 member countries to keep tabs on the global economy. (Additional reporting by Guido Nejamkis, Magdalena Morales, Luis Andres Henao and Jorge Otaola, Lesley Wroughton in Washington and Walter Brandimarte in New York; Editing by Andrew Hay)