Bloomberg
February 3, 2013
By Joshua Goodman and Ian Katz
The International Monetary Fund’s historic rebuke of Argentina is likely to cement its outcast status among global investors while failing to persuade the government to boost the credibility of its economic data.
Argentina on Feb. 1 became the first nation to be censured by the IMF after the Washington-based lender said that President Cristina Fernandez de Kirchner’s government isn’t addressing concerns that it’s underreporting inflation, which analysts forecast is more than double the 10.8 percent official rate. While the move won’t have an immediate effect, it takes the country a step closer to sanctions that include expulsion.
“This official action makes it quite apparent to those who may want to invest in Argentina that there’s trouble,” said Albert Fishlow, a former top U.S. diplomat to Latin America.
Still, Argentina’s feuding with foreign investors dates back to its 2001 financial meltdown, which Fernandez blames on the fund, and she is unlikely to change the course of policy that is being shaped by other influences, such as the price of soybeans, he said. Argentina is the world’s third-largest exporter of the crop, which is the nation’s biggest source of hard currency.
“It’s a big drama and this isn’t the final act,” Fishlow said in a phone interview from New York.
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