Tuesday, February 19, 2013
For the first time in its history, the International Monetary Fund (IMF) has issued a motion of censure toward one of its member countries. Regrettably, this sad privilege of inaugurating that sentence has been ours. The sanction comes after Argentina did not honor Article VIII of the organization’s bylaws. That article establishes that member countries must provide correct information that allows for the process of regular macroeconomic monitoring which the institution carries out for all its affiliated members, be they recipients of financing under any assistance program or not.
In the case of Argentina, the non-compliance with Article VIII has come over the refusal of our country to adequately measure its inflation and its numbers around Gross Domestic Product (GDP). Both indicators have been systematically manipulated since the government made the decision to intervene at the National Institute on Statistics and Census (INDEC) starting in January 2007, a fact that is not doubted by either the general population, nor the pro-government or opposition labor unions, nor likely even the highest authorities of the national government.
Argentina has committed on numerous occasions before the IMF to review the elaboration of the price index and replace the traditional Price Index of Greater Buenos Aires (CPI-GBA) with one of national reach, that in the view of the government would better reflect the true inflation rate in Argentina. Notably, hours after hearing of the IMF sanction, the national government confirmed that this year there would be the implementation of a new index to measure inflation. Economy Minister Hernan Lorenzino said that he’s been working on one to replace the CPI-GBA, which only has reach over the City of Buenos Aires and some parts of the metropolitan area.
It’s a new promise on an issue that, however, has never presented any inconveniences whatsoever. Why would the government want to calculate a National Price Index when the only official interest has always been to sustain, falsely, a lie inaugurated in January 2007?
In fact, before that intervention, both the INDEC and Argentina’s CPI were considered as models for other countries in the region. One of the most important experts in putting together price indices and calculations of national accounting, the Canadian statistician Jacob Ryten, can vouch for that, as he already collaborated very intensely with Argentina and over many years to achieve continued improvements in the calculations made by the then-respected employees of the INDEC.
In a recent interview Ryten gave to Ambito Financiero, he said that INDEC has for some time been breaking international rules around the information that it must provide to the IMF. And he went even further: “It’s not possible,” Ryten said, “to continue talking with the (current) leadership of INDEC because it doesn’t have the knowledge, the experience, the contacts with international experts and, above all, the moral integrity to put together a CPI with the necessary quality and credibility. Before talking with the leadership that is there, I would demand their immediate resignation.”
IMF bylaws have since 2004 included a methodology for treating member countries who falsify their statistics. The first step within that methodology is the motion of censure, which Argentina has already earned. Then comes, in the case of persistently false statistics, the declaration of non-eligibility for using the entity’s funds, and then, after that, removal of the right to vote on the board. Finally, there is expulsion from the organization.
While it’s not possible to know in an official way what the vote count was like on the IMF board, which decided on the censure motion, it came out that the main countries of the world voted against Argentina. And in the group of 24 nations making up the board only Brazil, Venezuela and Chile were opposed to the measure. Not even Russia nor China, usual proponents of measures opposed by the main western countries, backed our country.
The conspiracy theories, the plots that our President Cristina Kirchner takes such care to denounce, don’t seem in this case to enter the mind of any moderately informed analyst. When the pro-government CGT openly declared that inflation is 25% a year, the theory of plots enjoys less credibility than denying the arrival of man on the Moon.
Leaving Argentina’s statistics in the hands of the thugs from the central market or hooligans has its costs. One more step in Argentina’s total isolation, the only country in the region where the world has fallen onto its head.