Friday, September 21, 2012
By Marcelo Bonelli
A dozen members of the board of the International Monetary Fund strongly criticized Christine Lagarde over the postponement agreed to with the Casa Rosada for Argentina to normalize and make transparent its figures from INDEC. They sent a private internal letter to the head of the organization, in which they expressed their shared opposition to the agreement that the head of the IMF made with Cristina Kirchner.
Among the delegates that signed the complaint were the powerful directors from the United States, Germany, England, Holland, Japan and Italy. According to IMF sources, in that secret and concise letter they object to the political deal to avoid sanctions, basically with an argument of some weight: there is no concrete indication that Argentina will abandon its current statistical manipulation before December.
The confrontation generated a deep fracture within the Fund in relation to Argentina, and this could affect future decisions of the G-20, the Paris Club and the IMF itself. The critical position of the letter endorsed the text of the technical document that was sent from the Department of Statistics at the Fund. With the signature of its head, Adelheid Borgi-Schmelz, the paper says without any anesthesia that: “The INDEC undervalues prices that it incorporates in order to manipulate the inflation index.”
–The current indicator has serious methodological inconsistencies.
–Thus, maneuvering with the inflation level, the government managed a GDP growth that was greater than reality. It also minimized poverty and indigence rates.
–The move could try to hide Argentina’s macroeconomic imbalances, as occurred in Greece.
–There was no collaboration whatsoever from Argentine officials to correct the distortions.
But Lagarde tried to stop the debate and justified the connivance in a political question: to use the vote to censure would put in motion Argentina’s withdrawal from the IMF, something that Cristina Kirchner will use as an electoral banner next year.
Lagarde negotiated the three month delay with Hernan Lorenzino. The minister committed to giving signs, but to refloat the old project of the national price index. While he has the lowest international credibility, he said he was speaking in the name of the President.
It was promised to the head of the IMF that there would be an eventual confidential contact with her during the coming stay by Cristina in Washington and New York. This political pact has already been seen in a concrete fact: neither Cristina nor any official has come out to respond with equal force to the IMF statement.
There was silence, despite the lacerating and aggravating internal text against the country
At the Casa Rosada the meeting was detailed as well as the offensive, for the first time, of the delegate from the U.S. Treasury: Meg Lundsager changed her usual tone and joined in the criticism.
According to the confidential report that was made by Alfredo Mc Laughlin and Sergio Chodos, Humbert Temmeyer, the director from Germany, was also intransigent. Bonn didn’t forgive the Casa Rosada for having launched an attack on Repsol – the top listing on the Madrid stock market – when Angela Merkel was trying to stabilize Spain’s finances. Germany had already formulated a warning to the Paris Club and its delegate, Ulrike Metzger, voted on August 29 in the IADB against granting a loan to Argentina. The confidential memo from Mc Laughlin also says that there were complaints from Japan’s Daikichi Momma and Holland’s Menno Snel. Carlos Pérez Vardia of México and Paulo Batista of Brazil offered no defense at all for Argentina.
An agreement was reached between Lagarde and the Casa Rosada to buy some time. There is no solution to the problem.
Because both the IMF head and Lorenzino know that the government is correcting nothing at INDEC.
Yesterday, the Budget bill confirmed that there will be no changes in the statistical manipulation. It projects an inflation rate of 10.8%, that can only be reached by designing the data.
Guillermo Moreno running over the entities for consumer protection confirms that the government is ready to do everything and anything to cover up inflation. Moreno insulted and mistreated Sandra Gonzalez, a longtime defender of consumers. He did so when she asked him: “Secretary, can you tell me what your definition of ethics is?” Moreno was irritated by that and began to scream: “You’re a Radical, leave here. Get her out of here.” And he finished with a grotesque insult.
The government is trapped and cannot correct the inflation rate because it would acknowledge its failure to control food prices. Also, it would allow for an international lawsuit over the payment of bonds. To pull off the inflationary mask would also reveal the serious imbalance that the economy has and the lack of professionalism of the economic team, which dilapidated the real bases of growth put in place by Nestor Kirchner.
The officials are impotent, save their fights over positions of power.
Axel Kicillof’s “malpractice” left the President to make an announcement and two corrections – in 60 days – over the exports of biodiesel. For his part, Kicillof decided to lash out again against Miguel Galuccio: the day that the head of YPF went out looking for private investors abroad, the vice minister held a press conference to mark his territory and reclaim the role of the State.
The message was clear yesterday, upon the release of the Budget a key decision was confirmed: the govenrment ratified its whole strategy, the currency drag included, and it will make no corrections to the macroeconomic deviations.