Argentine Foreign Reserves Discrepancy Widest Since 2008

The gap between the Argentine central bank’s preliminary international reserves figures and official data released 48 hours later is at the widest since 2008, a discrepancy that may lead investors to question the bank’s reliability, according to JPMorgan Chase & Co.

The central bank said yesterday that reserves in January fell $2.85 billion to $27.7 billion, a loss that’s $365 million, or 15 percent, bigger than what was reported in the bank’s preliminary reserve statement, according to central bank data compiled by Bloomberg.

Reserves, which the nation uses to pay off international debt, have plunged to the lowest level in seven years and at the fastest annual rate since 2003. In the wake of the biggest devaluation in 12 years, the central bank may be initially overstating reserves in a bid to manage investor expectations, according to Vladimir Werning, an economist at JPMorgan. A year after the country was censured by the International Monetary Fund for misreporting economic data, the central bank’s tactic may backfire as the bank risks damaging its own reputation, he said.

“It is a dangerous game to play,” Werning wrote in a report yesterday. “During a balance of payments crisis - as Argentina is undergoing - such manipulation of official statistics (and one so critical for market sentiment) is detrimental to the needed confidence building around the transition” in the foreign exchange regime.

‘Final Tally’

Central bank preliminary data has over-stated reserves by an average $257 million per day since the government began devaluing the peso Jan. 22, compared with an average $15 million in the previous month.

The central bank declined to comment on the discrepancy.

“This figure is subject to changes for the final tally,” the bank’s daily e-mail with preliminary figures says. “As always, the final consolidated figure will be published in two days.”

Official economic data published by the National Statistics Institute, including inflation and gross domestic product, have been questioned by economists since early 2007 after personnel changes in the agency. Private economists estimate annual price increases are more than double the official estimates of 10.9 percent.

Under deadline from the IMF, the government plans to introduce a new inflation index on Feb. 13.

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