IMF: 'We haven't received an Argentine response over inflation recommendations'

By Liliana Franco, from Washington DC.-

International Monetary Fund Western Hemisphere Director Nicolás Eyzaguirre said the organization had not yet received any official communication from the Argentine government regarding the IMF’s recommendations over its inflation index.

“It is up to the authorities to make it public. It is in their hands and we have not received yet – it is too soon – communication whether they intend to follow the (IMF’s) recommendations,” he stressed during a press conference in Washington.

The Fund’s staff had communicated on Monday that they had presented the report to the Argentine authorities with specific recommendations over the design and development methodology of a new Consumer Price Index (IPC). It was after the IMF’s Technical Assistance mission headed by Carlos Medeiros, counsellor of the Western Hemisphere Department.

When he was asked over the countries that the IMF had reported that are running the risk of an overheated economy, in which Argentina has been named, Eyzaguirre assured that it is not seen as a bad signal for Argentina’s economy particularly, because it is a G20’s comparative chart, where also Indonesia and Brazil are settled in the same situation.

“It does not represent a critic of Argentina,” the official reaffirmed without giving much importance to the warning published in the report.

Eyzaguirre added that despite the overheating signs, the growth will remain high, although he warned over the possibility of a stop in the labour growth or even an increase in unemployment rates.

When the under-secretary of the IMF Western Hemisphere Department, Gilbert Terrier, was asked about the inflation level, he said that everybody knows that the IMF is assessing the index and that “no matter which price index we analyze, what we see is that the monetary expansion is growing, between 20 and 30 percent.” He also added that another fact they had observed is the wage increase issue.

Eyzaguirre also mentioned that it might be necessary to apply a type of fiscal adjustment, which shows a tougher position of the IMF staff from the one presented by the head of the organization, Dominique Strauss-Kahn.

When he was asked over the capital controls, the head of the Western Hemisphere Department assured that the financial stability is one of the main mandates of the IMF, but does not have a specific mandate to recommend policies involving capital control.

“We don’t tell the countries if they can apply or not these types of controls, but we do tell them if a particular measure or concept is correct,” Eyzaguirre added.

He also added that the international stability needs the international cooperation. “We know it’s going to be a long process. For example, some countries consider that we never mention the capital controls and others had questioned us assuring that we want to enforce them. We only warn them and give our opinion over the issued that could eventually affect the global financial stability.”