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IMF Urges Argentina to Fix Inflation, GDP Data Within Six Months

The International Monetary Fund urged Argentina to improve its consumer price and economic growth data, which economists say underestimates one of the fastest inflation rates in the world.

The IMF yesterday criticized the “absence of progress” shown by Argentina in improving its statistics. President Cristina Fernandez de Kirchner’s government needs to undertake specific steps to ensure that it meets “the obligations of all member countries to provide accurate data” within 180 days, the Washington-based lender said.

Argentine consumer prices rose 23 percent last year, the most among the Group of 20 nations, according to opposition lawmakers who base their estimates on reports by economists facing fines of 500,000 pesos ($115,000) for questioning the government’s data. The national statistics agency said prices climbed 9.5 percent in December from a year earlier.

“The level of frustration by the IMF and the markets is rising because they have not seen any significant progress in improving the quality of the official statistics, mainly on inflation and GDP,” said Alberto Ramos, senior Latin America economist at Goldman Sachs Group Inc. in New York.

Argentine bonds linked to the official inflation index fell 25 percent last year as the government fined researchers and failed to implement the recommendations of an IMF report requested by Fernandez and submitted in April. Latin American inflation-linked debt fell 0.7 percent over the same period, according to Barclays Capital.

Poor Quality

Press officials at the Economy Ministry and national statistics institute didn’t return a message left by Bloomberg News. Norberto Itzcovich, the statistics institute’s technical director, said last September that the methodology used by independent researchers wasn’t of the quality required to accurately measure inflation.

Argentine economists began releasing their own inflation reports in 2007, after then-President Nestor Kirchner changed personnel at the national statistics institute in what he said was a bid to “improve operations.”

Annual economic growth in South America’s second-biggest economy is overstated by as much as 2 or 3 percentage points as a result of the government’s low inflation estimates, said Ramos. The government said gross domestic product climbed 9.2 percent last year.

In 2010, Fernandez asked the IMF to help create an index that would reflect current nationwide consumption habits. The government has refused to let the fund review its finances since 2006, when it paid off its $9.8 billion debt to the lender. Kirchner blamed the IMF for pushing the country into a financial crisis that led to a 2001 default on $95 billion of bonds.

Delayed Index

The Argentine government received “specific recommendations on the design and methodology for developing a new national CPI,” the IMF said in a statement last April. No new index has since been introduced and Itzcovich said in September that one won’t be released until 2013.

“The Executive Board regretted the absence of progress in aligning the Consumer Price Index for Greater Buenos Aires  with international statistical guidelines and took note of the authorities’ intentions to adopt some remedial measures to address the quality of its reported gross domestic product data,” the IMF said in its statement yesterday.

Last month, Gerry Rice, director of the IMF’s external relations department, said the board wouldn’t apply sanctions against the country for not complying with its recommendations.

The IMF board will next meet Sept. 6 to review any changes made by Argentina.

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