Fight over Argentina’s inflation rate pits government against private economists

“No one believes the government’s statistics — not the IMF, not the World Bank, not the U.N.,” said Robert Shapiro, who helps oversee a Washington group lobbying for Argentina to pay its debt to American investors. “You can’t change underlying economic reality by decreeing it isn’t so.”

The Obama administration’s patience with Argentina has also worn thin, as evidenced by recent U.S. efforts to block loans by the Inter-American Development Bank to Fernandez de Kirchner’s government. Argentina defaulted on $100 billion in 2001 and has since defied numerous judgments from U.S. courts to pay up. The Argentine government owes an estimated $15 billion to hard-core creditors and more than $7 billion to the Paris Club, an informal group of financial officials representing the world’s wealthiest nations, said Arturo Porzecanski, an economist at American University and an expert in international finance who closely follows Argentina.

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What is Argentina’s true inflation rate?

The controversy over the inflation numbers, Porzecanski said, is part of larger problems in Argentina: a lack of transparency in handling the economy and an unwillingness to abide by international obligations, such as permitting the IMF to evaluate the country’s economic performance. Porzecanski said Argentina is the only country in the Group of 20, which will hold its annual meeting in France this week, that refuses to do so.

“They’re like the black sheep of the G-20 family,” he said.

Contradictory evidence

The Argentine government’s efforts to squelch the consultants’ higher inflation numbers have been particularly baffling because of evidence revealing the true inflation rate.

Labor unions, for instance, routinely seek and win 30 percent annual raises for workers, not the single-digit increases that would be expected were the inflation rate as low as the government contends. Public spending also rises at that rate. Even a government-organized commission of economists from five universities concluded that the official inflation figure was vastly lower than the real rate.

None of that stopped the government from issuing letters to private consultants this year demanding details of how they calculated economic data. Orlando Ferreres, a well-known economist, sent a 200-page response.

But the government still leveled a $125,000 fine and called on Ferreres to apologize “for having fooled the public with mistaken information,” he recalled.

Later came criminal complaints accusing Ferreres, Bevacqua and another consultancy, M&S, run by Carlos Melconian, of speculating with local banks.

Some pressure has been taken off by congressman Ricardo Gil Lavedra and other opposition lawmakers. They have begun a monthly compilation of the average rate of inflation from data provided by the consultants and are publicly releasing the numbers.

“This is about more than just having a good set of data,” Gil Lavedra said. “This is about respecting the right of free expression.”