Say what you will about the IMF, but they're pretty thick-skinned folks by now with all the criticism they engender year after year. Materially, however, the power they have over countries emanates from them being able to withhold emergency lending to countries that do not stick to the (structural adjustment) programme. Witness the likes of Serbia and Hungary endangering their IMF (life) lines due to abrogating central bank independence, the sine qua non of modern central banking for the neoliberal set.
Today, it's Argentina's turn to be in the IMF doghouse [arf-arf]. And how! Remember that Argentina was not so long ago in a major crisis situation as its currency board collapsed at the turn of the millennium, necessitating the largest bailout to that point in time. The IMF came to the rescue, but suffice it to say that controversy still, ah, dogs the bailout and the lender remains vastly unpopular there. Longtime readers will remember that the current Argentinian President Cristina Fernandez successfully campaigned on the idea of never having to approach the IMF again. Although Argentina fully paid off its IMF loans half a decade ago, its name still invokes fear among many Argentinians.
Apparently, the IMF is still dissatisfied with Argentina. As a user of system of national accounts and balance of payments statistics produced by various national governments, the IMF is of course interested in ensuring that these statistics be reasonably accurate. However, it called out Argentina once more a few days ago over the latter's dubious bean counting:
As it turns out, the IMF data request is but the tip of the iceberg of an Argentina--or, more specifically, a Cristina Fernandez versus the West running battle, with the IMF acting as the agent of the United States et al. Aside from nationalizing foreign energy firms, the international economic community has any number of other grievances with her variegated populist stylings:
Meanwhile, Fernandez is still stuck in this Latinate victim complex mode fulminating about the evils of Western capitalism--all the while charting a course for yet another economic breakdown by the looks of it. At the end of the day, my dear Cristina, having to cook the books is indicative not of "standing up the West" but of embarrassment in one's inability to sustainably improve Argentina's economic fortunes. That is all.
Still, it is interesting how the West thinks the IMF can be used to club Argentina even now. Is Argentina really that close to requiring yet another IMF infusion that denying the possibility will make Argentina behave no matter how hated it is? Or, can it use a non-conditionality sanction alike temporarily suspending Argentina from the Fund? Stay tuned, for I believe the endgame should prove to be very interesting and informative.
26/9 UPDATE: To no one's surprise, Cristina Fernandez did not take kindly to the football analogy while in New York to speak at the United Nations. Still, she is not really addressing the criticism about cooking the books:
Apparently, the IMF is still dissatisfied with Argentina. As a user of system of national accounts and balance of payments statistics produced by various national governments, the IMF is of course interested in ensuring that these statistics be reasonably accurate. However, it called out Argentina once more a few days ago over the latter's dubious bean counting:
The IMF’s Executive Board met on September 17, 2012 to consider the Managing Director’s report on Argentina’s progress in implementing the remedial measures to address the quality of the official data reported to the Fund for the Consumer Price Index for Greater Buenos Aires (CPI-GBA) and Gross Domestic Product (GDP). (See: Statement by the IMF Executive Board on Argentina, Press Release No. 12/30, February 1, 2012.)Now we receive further news that IMF Managing-Director Christine Lagarde is getting ready to issue Argentina a "red card" over the matter should it not change its ways:
The Executive Board regretted the lack of sufficient progress in implementing the remedial measures since its February 1, 2012 meeting and expressed to the authorities its concern that Argentina has not brought itself into compliance with its obligations under the IMF’s Articles of Agreement by implementing the said measures. The Board took note of the ongoing dialogue between the IMF and the authorities regarding the measures, and called on Argentina to implement the measures without delay.
The head of the International Monetary Fund said on Monday she hoped Argentina could avoid IMF sanctions over its flawed economic data and has three months [17 December to be accurate] to improve the quality of its growth and inflation statistics." If no progress has been made, then the red card will be out," IMF Managing Director Christine Lagarde told a Washington audience, drawing from a soccer analogy for penalizing players.While the Argentinians are supposedly obligated under the articles of agreement to provide reasonable quality data--I can't really point out where, though--the IMF does not really have leverage over the Latin American nation at this point in time since it paid off its IMF loans in 2006. This then brings us to the question of why Argentina is seemingly reluctant to issue better quality statistics. Obviously, it should have an interest in depicting inflation as being "under control" in its largest city. The same thing holds with "showing" the world that Argentina is a growing nation, economically speaking, under Fernandez. Alike the previous post, it's another one to file under the political economy of statistics.
"I was quite comforted to see the Argentinian authorities' reaction over the weekend ... of their determination to work cooperatively with us," she said. "I hope we can avoid the red card but if the data is not suitable, not appropriate, does not meet the standards, then all players are the same ... despite how good they are at soccer," she added.
As it turns out, the IMF data request is but the tip of the iceberg of an Argentina--or, more specifically, a Cristina Fernandez versus the West running battle, with the IMF acting as the agent of the United States et al. Aside from nationalizing foreign energy firms, the international economic community has any number of other grievances with her variegated populist stylings:
President Cristina Fernandez is on a US tour this week with a message for critics on Wall Street and in Washington who say Argentina is headed for economic disaster by refusing to play by the rules of the global financial system: good riddance to the rules. Her government has racked up a long list of unpaid IOUs while helping the country recover from its humiliating, world-record debt default a decade ago, but Fernandez argues Argentina's economic rebound has been possible precisely because its leaders have stood up to foreign pressures and put their people first.
Argentines used to be "dazzled by the North," she said last month while inaugurating an expanded highway, one of many infrastructure projects she said would have been impossible had her government done as outsiders demand. "They hadn't noticed that the rich countries don't want partners or friends; they just want employees and subordinates. And we're not going to be anybody's employees or subordinates. We are a free country, with dignity and national pride."She also plans to snub Obama while recycling Latin socialist themes in the process:
Fernandez was meeting with billionaire George Soros and Egypt's new president Mohamed Morsi on Monday, but was skipping a dinner that President Barack Obama is hosting for his fellow leaders at the Waldorf Hotel, planning instead to visit an Evita Peron exhibit at the Argentine consulate. Fernandez says corporations no longer tell Argentine presidents what to do, and instead must heel to a government that puts the people's needs first. Natural resources are once again sovereign, and Argentina is freer than ever from international debt obligations.Why cook the books, then? Alas, Argentinian inflation figures seem to have been "massaged," and the GDP figures may not be any more reliable as their statistics increasingly emanate from the land of make-believe. Meanwhile Argentina is racking up yellow cards at a torrid pace:
A far different picture is presented by Argentina's many critics in the U.S. and Europe. In the past few days alone, Moody's Investors Service downgraded the country's risk rating, potentially increasing borrowing costs for anyone doing business with Argentina, and the International Monetary Fund chief drew a firm line Monday against Argentina's widely disbelieved economic data. The government's INDEC statistics agency has magically kept inflation below 1 percent monthly for the last 29 months, even as consumers struggle with price hikes two or three times bigger...I think we needn't state the obvious as she comes out swinging against all comers--especially the IMF with firebrand rhetoric that would do Che Guevara in his heyday proud:
Obama's trade negotiators and diplomats have lost patience, removing trade preferences over her refusal to pay more than 100 court judgments to U.S. businesses. Her government also has ignored World Bank arbitrators, stiffed the Paris Club lenders and brushed off the European Union's threats of sanctions for expropriating Grupo Repsol's $10.5 billion stake in Argentina's oil company without any compensation.
"These legal questions continue to raise red flags to investors that the Argentine government does not respect the rule of law," University of Houston energy analyst Michael Economides concluded Thursday in a scathing report that accused Fernandez of "populist thuggery..."
Fernandez anticipated such criticism in her highway speech, recalling that her late husband and predecessor, President Nestor Kirchner, "dared to tell the IMF to go to hell...That's what they're never going to forgive: that Argentines have been able to demonstrate, contrary to all the theories of despondency, of fear, of unpatriotic feelings of those who didn't believe in Argentina that they could do what's necessary so that Argentines would live better," she said.I am generally unimpressed with anti-Western rhetoric when it is used as a smokescreen for economic mismanagement. Unfortunately, that seems to be the case here. Remember, South Korea too was well and truly broke not long before Argentina was during the Asian financial crisis. Rather than b*tch and moan about the evils of the West, however, the Koreans worked out what they needed to do in order to avoid a rehash. And, of course, they have since done the Westerners one better in becoming more economically progressive in the new millennium.
"They still keep punishing us, because we're a bad example; we're the example that it's possible to build a country without an outside tutor. We're the example that a country can vote for a president and the one who decides is this president."
Meanwhile, Fernandez is still stuck in this Latinate victim complex mode fulminating about the evils of Western capitalism--all the while charting a course for yet another economic breakdown by the looks of it. At the end of the day, my dear Cristina, having to cook the books is indicative not of "standing up the West" but of embarrassment in one's inability to sustainably improve Argentina's economic fortunes. That is all.
Still, it is interesting how the West thinks the IMF can be used to club Argentina even now. Is Argentina really that close to requiring yet another IMF infusion that denying the possibility will make Argentina behave no matter how hated it is? Or, can it use a non-conditionality sanction alike temporarily suspending Argentina from the Fund? Stay tuned, for I believe the endgame should prove to be very interesting and informative.
26/9 UPDATE: To no one's surprise, Cristina Fernandez did not take kindly to the football analogy while in New York to speak at the United Nations. Still, she is not really addressing the criticism about cooking the books:
Fernandez ridiculed the warning. “My country is not a soccer club. It is a sovereign nation that makes its decisions sovereignly and will not be subjected to any pressure, let alone to any threat,” she said. Fernandez did not refer directly to the economic statistics questioned by the IMF, saying only that Argentina has turned its back on formulas promoted by the agency and has a stronger economy than countries that follow its prescriptions.As before, my opinion remains that the best insurance against needing IMF support is to have a well-functioning economy.
