IMF’s Censure of Argentina Solidifies Investors’ Outcast Status

The historic rebuke of Argentina of the International Monetary Fund is probably going to cement the outcast status among the global investors; however, it has not been able to persuade the Argentine Government to boost the process of building credibility of economic data. Incidentally, on 1st February, Argentina became the first ever country to be censured by the International Monetary Fund. While announcing the decision, the officials of the International Monetary Fund or IMF stated that the Government is not addressing the concerns of investors of an underreporting inflation. According to analysts, the actual rate is somewhere double of the official inflation published that of 10.8%. The move of IMF is not expected to have an immediate effect; however, the decision definitely takes Argentina a step closer to several sanctions including the expulsion.

According to Albert Fishlow, the former US Diplomat to the Latin America, investors will now be worried before investing any money into Argentina, as the announcement of IMF makes it clear that trouble is brewing ahead for this Latin American country. Fishlow added that some other stern actions can also be expected from the officials of IMF soon.

Incidentally, Argentine President Cristina Fernandez de Kirchner’s Government is not expected to change the current course of financial policy despite the action of the IMF. Argentina, the third biggest exporter of Soybean is more focusing on a policy that shapes up by influence of this crop, according to many analysts. Soybeans make the biggest source of hard currency for Argentina.

Hernan Lorenzino, the Economy Minister of Argentina has already stated that IMF censure is completely baseless. Hernan added that IMF has taken a double standard when it comes to Argentina as it has continuously been ignoring its inability to detect data mistakes that are often made by the rich nations. According to Hernan, those faulty data played a big part in the global financial crisis.

In 2001, Argentina experienced a default on the $95 billion debt and since then, it has locked in a battle against the foreign investors and the IMF. The Government has not allowed IMF to review its finances since 2006, despite of the fact that it is a requirement for all the member nations. In the very same year, Argentina completely paid off the entire debt. Things got more tensed when Kirchner replaced Indec’s staff member.