Argentina to Replace Bogus Inflation Index

In an effort to mend relations with the IMF, Argentina will unveil a new CPI this week that should acknowledge the government has been systematically underestimating inflation.

Argentina, seeking to rebuild relations with foreign investors, will unveil a new consumer price index this week that probably will acknowledge something the government has denied for seven years: that it systematically underestimated inflation.

The nationwide index released on Feb. 13 will replace the benchmark greater Buenos Aires index that has shown inflation at less than half the pace of private estimates since 2007, when former President Nestor Kirchner replaced senior staff at the statistics agency. The move comes a year after Argentina became the first nation to be censured by the International Monetary Fund for failing to report accurate economic data.

Repairing Relationship

Repairing its relationship with the IMF is a prerequisite if Argentina wants to settle $6.5 billion of overdue debt with Paris Club creditor nations, said Juan Pablo Fuentes, an economist at Moody’s Analytics Inc. Economy Minister Axel Kicillof, who traveled to Paris last month to meet officials representing the 19-country group, said Jan. 21 that an eventual agreement could help companies that are blocked from obtaining credit abroad.

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