July 30, 2014
Argentina has so far met targets for more accurate data, IMF says
Fund’s board says country has fulfilled requirements but warns challenges remain
WASHINGTON — Argentina has taken all the requisite steps to revamp its economic data so far, but it must still meet two more deadlines as it seeks to bring its data quality in line with international standards, the International Monetary Fund’s board said yesterday after analyzing the changes recently carried out by the government on its figures.
The IMF, which requires accurate statistics to analyze the world’s economies, last year censured Argentina over failing to improve its inflation and Gross Domestic Product growth rates — but later signalled the country was making progress.
The Executive Board of the IMF met yesterday to consider Managing Director Christine Largade’s report on Argentina’s progress “in implementing an initial set of specified actions called for by the Executive Board to address the quality of the official data” and highlighted the government’s actions for the Consumer Price Index (CPI) and GDP.
“The executive board recognized the implementation of all the specified actions it had called for at this juncture and the initial steps taken by the Argentine authorities to remedy the inaccurate provision of data,” the board said in a statement.
Th IMF board went on to note that “the Fund welcomes the ongoing discussions with the Argentine authorities to improve the quality of Argentina’s official CPI and GDP data and stands ready to continue this dialogue, and, more generally, to further strengthen relations with Argentina.”
The country must now comply with the IMF’s strict timeline for data improvements, which forces it to conduct further actions that would better align its data with international standards by the end of September, and then by February 2015.
The IMF board said it would next receive from the Managing Director Christine Lagarde a progress report on Argentina’s efforts to improve its data on November 14.
“The managing director will next report to the executive board on the status of Argentina’s implementation of the specified actions by November 14, 2014,” the IMF said. “At that time, the Executive Board will again review this issue in line with IMF procedures.”
The IMF had sanctioned Argentina with a “motion of censure” on February 2013 due to a lack of credibility on inflation and economic growth data that was published by the INDEC statistics bureau.
Analysts have accused the government of underreporting inflation since early 2007 for political gain and to reduce payments on its inflation-indexed debt.
Argentina has refused to participate in the IMF’s annual economic assessment for the past seven years — though it is not unique in South America. Ecuador has shunned the assessments for the past five years, and Venezuela has not participated since 2004. At the same time, the government demanded that the IMF not be involved in its negotiations to seal a deal with the Paris Club group of creditor nations on its defaulted debt.
The federal government revamped its consumer price index in February that measured the prices on goods and services nationwide. Previous readings were based on prices in Buenos Aires City and its suburbs.
Under the new index, the government estimates prices have risen 13.5 percent in the first four months of 2014 — 3.7 percent in January, 3.4 percent in February, 2.6 in March and 1.8 percent in April — exceeding the 10.4 percent that was estimated in this year’s Budget for the entire year.
The new index tracks prices on a basket of 520 goods and services, including food, drinks, clothing, housing, appliances, healthcare, transportation, communication, recreation and education.
The main element of information to build the index was the 2012 national survey of household spending, which explains how and how much Argentines spend nationwide. The old index was built on the 2004 version of the survey, which was considered outdated.
Unlike the old index, which measured prices only in the Greater Buenos Aires, the new index covers 200,000 prices across the nation in six main regions: Patagonia, North East, North West, Cuyo, Metropolitan Area and Pampeana. A basket of products was created for each region based on its consumption characteristics.
Herald with Reuters