BUENOS AIRES
Argentina’s government slammed private inflation estimates Thursday, hours ahead of the release of a new official measurement that will be closely watched by economists to see the country will end years of number fiddling.
According to the most widely followed gauge of inflation, an average of private estimates compiled by opposition lawmakers, inflation was 31 percent annual in January.
The government puts the rate at about 11 percent, but its measurement is considered by most Argentines to be false.
However, Presidential Chief of Staff Jorge Capitanich stood by the official measurement, saying that private estimates are “an authentic mess.”
“If you analyze all the consultants, none match and this calls into question the technical quality of the preparation of the data and its articulation,” he said in a televised press conference.
He added that the opposition uses the private estimates “as a tool to criticize the government.”
Capitanich spoke ahead of the government’s release of a new national consumer price index, which it started developing after widespread criticism surfaced in 2007 that its CPI measurement is spurious.
Private economists and multilateral lenders have criticized the government for manipulating inflation data to show lower numbers, with the International Monetary Fund (IMF) threatening to kick Argentina out of its fold last year.
The CPI data “is bogus, and that’s a polite way of putting it,” said Alberto Bernal, head of fixed-income research at Bulltick Capital Markets in Miami.
The government started manipulating the data in 2007 after inflation surged into the double digits as demand rose faster than production during a robust recovery from a 2001-2002 economic collapse, leading to shortages and higher prices.
At first, the government responded to the rapid rise in inflation by threatening manufacturers with punitive measures if they failed to increase production.
Following a refusal by the major industries, they started to tweak official economic data to show lower inflation.
The authorities put new managers in charge of Indec, the national statistics agency, and told them to fiddle with the data to show lower inflation, a practice that has continued.
Private estimates complied by opposition lawmakers show inflation of 28.4 percent annual in December, far more than the official rate of 10.9 percent for that period.
The government tried to stop the private estimates with threats of fines, but the courts sided with the consultants.
The IMF clamped down and said last year it would censure Argentina for the poor quality of its economic data.
This could lead to the country’s dismissal as a member of the Washington D.C.-based lender, making it harder for the country and companies operating there to borrow abroad.
Argentina has until March 31 to show that it has come clean on its data reporting, and the first test is the new CPI that Indec will release at 4 p.m. local time (2 p.m. ET) for January.
Economists say they will watch to see if it shows at least 3 percent month-on-month inflation, not far from the 4.6 percent average estimate of private consultants, as compiled by opposition lawmakers and announced Wednesday.
That would put year-on-year inflation at 31 percent, among the highest in the world.
The failure to provide accurate data could bring bigger problems for Argentina.
The country is in default on nearly $10 billion in debts with the Paris Club of creditor nations, and settlement is key for unleashing investment in the country for everything from fixing wobbly trains to drilling for oil.
Economy Minister Axel Kicillof traveled to Paris last month for talks with the club, whose members include Germany, Japan and the U.S., but came back largely empty handed.
The Paris Club has refused to negotiate without oversight from the IMF, which in turn won’t step in until Argentina starts to produce accurate and reliable economic data.
“Everything’s intertwined,” said Bernal. “If Argentina wants to grow, they need to fix their situation with the creditors, and one of the many steps is to fix its data.”
By Charles Newbery - Anadolu Agency
englishnews@aa.com.tr
