Argentina has asked the International Monetary Fund to help revamp its widely discredited inflation data in a surprise about-face by president Cristina Fernandez announced today.
Argentina's centre-left government has barred the IMF from conducting routine annual evaluations of its economy since 2006, saying the fund's policy recommendations helped cause the country's devastating 2001-02 economic crisis.
Ms Fernandez last week triumphantly announced Argentina had convinced the Paris Club of creditor nations to negotiate the repayment of some $6.5 billion in defaulted debt without IMF oversight.
But inflation is seen as her Achilles heel less than a year from the next presidential election, suggesting today's announcement may be aimed at taking the steam out of opposition criticism over rising prices and questioned official data.
Some analysts said Ms Fernandez may also be moving to moderate the hardline stance of her husband and predecessor, Nestor Kirchner, who died suddenly in October.
Economy minister Amado Boudou, also a frequent critic of the fund, said the country would work with the IMF to restore credibility to government data in a clear step toward mending fences.
"We have asked the International Monetary Fund for technical assistance to design, construct and implement a price index on a national level," Mr Boudou told reporters.
He said "quality is lacking in Argentine statistics", something the government has been loathe to recognise.state statisticians have accused the government of under-reporting inflation since early 2007 for political gain and to reduce payments on inflation-linked debt.
Argentina's statistics agency reported annual inflation of 11.1 pe rcent through October, while private estimates hover near 25 per cent.
The IMF said it was in touch with Argentine authorities over organising the technical mission. Previous efforts to team up on the data fell through last year.
"This is an enormous change ... it highlights something that is becoming increasingly evident, which is a marked change of direction in the president's style in the wake of her husband's death," political analyst Graciela Romer said.
Mr Kirchner paid off Argentina's debt to the IMF in early 2006, and later said there was "no way in hell" the country would borrow again from the fund.
Argentine government bonds trading locally over-the-counter reacted positively to the announcement, rising slightly this afternoon after initially dipping.
Argentina's debt spreads are among the highest in Latin America due to lingering fallout from a $100 billion default and the more-recent fudging of economic data.
The government made methodological changes to the consumer price index in 2008 but they did not quell criticism. The statistics agency Indec also stopped measuring inflation nationwide and focused exclusively on the Greater Buenos Aires metropolitan area.
Norberto Itzcovich, Indec's technical director, said IMF officials would visit Argentina in early to mid-December, adding that technical conversations with the IMF had been going on for three years.
Asked if a revamp of the inflation index would affect past data, Indec's director Ana Maria Edwin said "you never revise an index retroactively".
An admission that Argentina lied about inflation could prompt lawsuits by holders of inflation-indexed bonds.
The officials made no mention on the long-delayed Article IV economic review, which the IMF conducts with each of its 186 member countries to keep tabs on the global economy.
Reuters