September 18, 2012 / 9:16 PM / 7 years ago

IMF warns Argentina to fix economic data

WASHINGTON (Reuters) - The International Monetary Fund on Tuesday reprimanded Argentina for not taking the necessary steps to improve the quality of its economic data, which many private analysts deem misleading.

The IMF board, which met on Monday to consider whether Argentina had improved the accuracy of its growth and inflation data, expressed concern and said it “regretted the lack of sufficient progress.”

“Argentina has not brought itself into compliance with its obligations under the IMF’s Articles of Agreement by implementing the said measures,” the IMF said in a statement.

Argentina has long been accused of under-reporting inflation and exaggerating economic growth and industrial output figures. It could face IMF sanctions, including eventual expulsion, unless it addresses its data shortcomings.

The board said it will review the situation again by December 17, 2012 “and may consider additional steps based on Argentina’s response and in line with IMF procedures.”

“The board took note of the ongoing dialogue between the IMF and the authorities regarding the measures, and called on Argentina to implement the measures without delay,” the IMF said in a statement.

An Argentine economy ministry official declined to comment on the IMF decision. The government has denied any data manipulation although it has brokered wage increases for workers that are in line with private inflation estimates.

The INDEC statistics institute reports inflation of about 10 percent a year, while independent economists put the number at between 20 percent and 25 percent.

In 2010, leftist President Cristina Fernandez unexpectedly asked the IMF, one of her favorite rhetorical punching bags, to send a technical mission to Argentina to help design a new nationwide consumer price index, raising hopes of improved data.

But the move was later interpreted as a bid to buy time since the new index may not go into effect until 2014.

The government is accused of under-reporting inflation since early 2007 for political gain and to reduce payments on its inflation-indexed debt.

Relations between the IMF and Buenos Aires have been strained since Argentina’s 2001-02 debt crisis, which the government and many ordinary Argentines blame on IMF policies. Argentina has refused to allow the IMF to conduct routine assessments of its economy since 2006 when the country repaid all of its IMF loans.

“As the country has cut its financing relationship with the IMF, it actually has very little to lose from this controversy, apart from a further damage to its credibility,” Boris Segura, head of Latin America strategy at Nomura investment bank, wrote on Tuesday.

Reporting by Lesley Wroughton; Additional reporting by Hilary Burke in Buenos Aires; Editing by Theodore d'Afflisio and Carol Bishopric

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