Agentina got off lightly at the International Monetary Fund’s Executive Board meeting on December 9. President Cristina Fernández de Kirchner and her team clearly haven’t undertaken all the remedial measures that the Fund had demanded when it censured Argentina in February over the accuracy of the country’s economic data, specifically its inflation and GDP figures. It gave the country a deadline of this month for improving them. Yet far from imposing the Draconian measures it had threatened for failing to meet the deadline, the Fund’s Executive Board just extended it.
That suggests, at the very least, that the IMF is reluctant to take any further steps against the South American country, or, more likely, that it realized that its threats don’t cut much mustard within the increasingly economically nationalist Argentine government. Kirchner, like her late husband and former president Néstor, is a harsh critic of the Western-based multilateral institutions. She has promised a new national Consumer Price Index (CPI), but it will be on her timetable, not the IMF’s. It is expected in early 2014. Whether that is a small victory or a small defeat for the Washington-based institution is moot. Putting a brave face on it, IMF Managing Director Christine Lagarde said in November that Argentina had made “positive progress” in reforming the quality of its economic data.
The new system takes into account prices from the whole country, instead of only Buenos Aires and its environs. Responsibility for compiling it will pass from the national statistics agency INDEC to the economy ministry. This is a further sign of the growing power of new Economy Minister Axel Kicillof at the head of the the president’s new economic team, as part of which Kirchner loyalist Juan Carlos Fábrega has moved to be president of the central bank.
For now we know little about the new national CPI other than it will be published monthly and will use a fixed basket of goods and services. Conventional enough, but good enough for the IMF? And what about Argentina’s growth indicators? “The Board also noted that Argentina is working to address the shortcomings in its GDP data,” the IMF said briefly and vaguely in its post-meeting statement. Argentina has been given until March 2014 to implement first changes. Further action must be taken by end-September 2014 and again by end-February 2015. Kirchner must be smiling as the threat of sanctions recedes.