The IMF in Argentina: the search for relevance

1 April 2008

By María José Romero, Choike

Since Cristina Fernández de Kirchner assumed the Argentinian presidency in December the Fund has been involved with the renegotiation of Argentinian debt with the Paris Club and a controversy over official statistics.

The Paris Club of rich country creditors have failed to conclude debt renegotiations with Argentina since 2005. The club requires borrowers to have a programme with the IMF, which Argentina has steadfastly rejected. In December IMF managing director Dominique Strauss-Kahn visited Argentina and expressed the Fund’s readiness to cooperate but advised that the best option is for the Paris Club to waive its requirement of the IMF’s endorsement of the Argentinian economy. The Paris Club has not moved on this recommendation, blocking any possibility of agreement.

Meanwhile, the IMF is investigating the Argentinian inflation index to determine whether the country violated international statistics standards. In a letter to the government, the director of the IMF statistics department, Robert Edwards, suggests that the indicators that go into calculating inflation may have been temporarily amended. He demands that Argentina inform the Fund of any change envisaged for the measurement of inflation and indicate the reason for the change. Predictably, the Argentine government has rejected this attitude.

In early March, the Fund’s Argentinian executive director Héctor Torres informed his government that the IMF intended to strongly censure the country in its flagship publication, the World Economic Outlook, to be launched in April. Ultimately the IMF decided to postpone a formal, public critique and used the government’s inflation figures in the report. The Argentinian government sees this as an attempt by both local financial circles and the IMF to undermine the president’s credibility. According to vice president Julio Cobos, “these [criticisms] are assessments of the institution; we could also criticise the policies that the IMF has recommended throughout its history, since many of them affected us, yet we maintain prudent reserve in our words”.