March 8, 2014
IMF reviews INDEC reform
Organization set to analyze proposal loday
The International Monetary Fund’s (IMF) Executive Board is set to begin analyzing Argentina’s proposed Consumer Price Index (CPI) reform today. If approved, the system — which takes into account prices from the whole country, as opposed to only Greater Buenos Aires and the City — will be implemented as of January, with the first report scheduled for publication in February.
IMF Managing Director Christine Lagarde personally delivered Argentina’s proposals to reform its inflation statistics methodology and GDP calculations to the international organization on November 13, later commenting that the Fernández de Kirchner administration had made “positive progress” in reforming the quality of its economic data, while December 9 was set as the date for the directors’ review.
The government has been working for almost a year alongside IMF technicians on a new national consumer price index, which will replace the much-questioned index currently used to measure inflation that only takes into account prices in Greater Buenos Aires. Thus, the government’s proposal is expected to be approved, opening the prospect of the country gaining access to international financing.
The development of the new national CPI came as a result of the pressure that the IMF has been applying on Argentina to get it to resolve its much-questioned statistics on inflation and growth.
The new national index will be published monthly and will use a fixed basket of goods and services. It will become a reference point for determining values for the basic food basket and total goods basket, which are used to measure poverty and destitution.
The new price index will be under the purview of the Economy Ministry office on Paseo Colón and Estados Unidos streets in downtown Buenos Aires, thus removing the task from INDEC.
The INDEC’s inflation statistics have been heavily questioned since 2007, when the government replaced some key people at the inflation bureau and began underestimating price increases.
The IMF, which requires reliable statistics to analyze the world’s economies, censured Argentina in February over failing to improve the accuracy of its inflation and gross domestic product growth data, giving the country until September 29 to take action. Analysts have accused the Fernández de Kirchner administration of underreporting inflation since early 2007 for political gain and to reduce payments on its inflation-indexed debt.
Herald staff with DyN