BUENOS AIRES (Reuters) - Argentina must impose an inflation-targeting regime to tame surging prices and should let the International Monetary Fund review its economy, opposition presidential candidate Ricardo Alfonsin said on Thursday.
Congressman Alfonsin, a center-left member of the social democratic Radical party (UCR), lags a distant second in most opinion polls behind President Cristina Fernandez seven months ahead of a presidential election.
But he told the Reuters Latin America Investment Summit he was confident of closing the gap as voting nears, saying his government would move swiftly to fight inflation estimated privately at about 25 percent -- more than twice the official rate.
“We’re going to combat inflation, the first step is to recognize its existence,” Alfonsin said, referring to the government’s widely discredited consumer price data. “We won’t be able to reduce inflation from one day to the next but we will be able to set targets to gradually bring Argentine inflation (down) in line with the rest of the world.”
Scorching industrial activity is helping stoke annual growth of about 9 percent, but high inflation is a major concern for voters and exporters worry inflation-fueled labor costs could increasingly price goods out of foreign markets.
Aiming to keep exports competitive, the central bank regularly intervenes to stop the peso currency from firming.
Asked what his policy would be, Alfonsin, 59, said such an “administered-float” policy would be necessary for as long as capital inflows threatened to strengthen the peso.
“If we have (investor) confidence, a lot of capital is going to pour in and that could weigh on the need to have a competitive exchange rate,” he said.
Alfonsin’s late father, former President Raul Alfonsin, governed Latin America’s No. 3 economy during a spell of hyperinflation, handing over power early as spiraling prices wreaked havoc in 1989.
Fernandez is keeping voters guessing about whether she will seek a second term following the death last year of her powerful husband and predecessor as president, Nestor Kirchner, but a re-election bid is widely expected.
She shares her husband’s unorthodox economic approach and shuns mainstream monetary policy recipes to curb inflation.
Fernandez has reached out to Kirchner’s arch-foe, the IMF, although she still refuses to let the Fund carry out its “Article IV” inspections -- annual economic revisions routinely undergone by the Fund’s member nations.
Argentina has barred the IMF from doing the revision since 2006, arguing the Fund’s actions helped precipitate the country’s worst-ever economic crisis in 2001-02.
Alfonsin, who said he admired the social democratic policies being pursued in neighboring Brazil and Uruguay, said he would let the economic evaluations resume.
“We also had problems with the IMF in the 1980s, but I wouldn’t ... refuse to allow an Article IV review because this doesn’t involve the imposing of any conditions,” he said.
Argentina’s fragmented opposition leaders have been fierce critics of current agricultural policies and Alfonsin said he would gradually reduce the high export taxes on grains that triggered a messy farming dispute in 2008.
“It’s a tax that causes distortions and we should steadily eliminate it,” he said.
The last Radical president to finish his term was Marcelo Torcuato de Alvear in 1928, and many Argentines still have fresh memories of the most recent Radical government’s collapse at the height of the 2001-02 meltdown.
Alfonsin, however, said a favorable global outlook and high prices for the country’s multibillion dollar grains exports, meant things would be different for him.
“I‘m convinced that we can do so many of the things that (my father) dreamed about doing, things the crisis prevented him from doing,” said Alfonsin. “For me, it’s a big responsibility.”
Additional reporting by Alejandro Lifschitz and Juliana Castilla, Editing by W Simon