The International Monetary Fund (IMF) has issued Argentina with a 'declaration of censure' for providing inaccurate inflation and GDP data and has given it until September 29th to amend the problems or will impose sanctions.
The IMF Friday called on Argentina to fix its statistics “without further delay”
“The fund has issued a declaration of censure against Argentina in connection with its breach of obligation to the fund,” The IMF said in a statement.
The IMF said it would review Argentina’s progress in November and warned that if the problems are not sorted then it could impose sanctions on the country. This would bar one of South America’s biggest economies from voting on IMF policies and accessing financing.
Relations between the South American country and the IMF have been steadily deteriorating since Argentina’s 2001-2002 debt crisis, which many in Buenos Aires blame on IMF policies.
Argentina’s Economy Ministry slammed the IMF for unfair treatment and accused them of double standards.
The Friday declaration was “not only a new IMF error but a clear example of unequal treatment and the double standards with which this organization treats certain members. This is the same fund that showed itself to be complacent about the inexact data and failed policies that led to the global financial crisis,” the statement said.
The ministry pointed out the IMF hailed Argentinian economic policies of the 1990’s as a success, the same policies that resulted in Argentina’s economic meltdown and debt default. The ministry also asked for an extraordinary meeting of the IMF board to discuss the lender’s decisions and policy.
Christine Lagarde, the IMF Managing Director, warned Argentina in September last year that it could be penalized unless it sorted out its data problems. Previous IMF chiefs, including Dominque Strauss-Khan and Rodrigo Rato, unsuccessfully tried to mend ties with Argentina, while other officials have avoided commenting on the country.
Economic analysts have accused the government in Buenos Aires of underreporting inflation since 2007 in order to reduce payments on inflation indexed debt and for political gain.
Inflation in Argentina is estimated by private economists to be at 25% a year and rising but the government reported it at 11% or less for last year, according to the Financial Times.
“This is a very serious step by the IMF, the situation in Argentina is deteriorating very quickly…and there is no sign that the government has any interest or willingness to even try to address some of the basic concerns of the fund,” Biorden Roett, director of Western Hemisphere Studies at John Hopkins’ Paul H Bitze School of Advanced International Studies in Washington told Reuters.