INDEC and Economic Data in Argentina
INDEC and Economic Data in Argentina
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Government bean-counters do not, in most countries, have a reputation for derring-do. But in Argentina some have proved to be martyrs and heroes. Statisticians whose findings displeased Cristina Fernández de Kirchner, the country’s president from 2007 to 2015, were sacked and then prosecuted for their effrontery. “Teams were decimated,” says Jorge Todesca, who has been appointed by the new president, Mauricio Macri, to clean up and repair the government’s statistics institute (INDEC). If they were not fired, independent-minded statisticians “just resigned and left”, or were banished to back rooms without equipment. In 2011 Mr Todesca’s economic-consulting firm was fined 500,000 pesos ($123,000) for publishing an inflation index that contradicted the one put out by INDEC.
It is not the only Augean stable Mr Macri discovered when he succeeded Ms Fernández in December. In addition to an economy in disarray, she and her late husband, Néstor Kirchner, who governed before her, left a state apparatus bloated by patronage and weakened by fiscal incontinence. Some 5-7% of public-sector employees do not bother to show up to work but collect roughly 20 billion pesos ($1.4 billion) in wages, estimates KPMG, an auditing firm. Even Tango 01, a 23-year-old Boeing 757 that serves as the presidential jet, is in disrepair. To get to Davos for the World Economic Forum last month, Mr Macri flew Air France.
The mess at INDEC is one of the worst. That is because Ms Fernández took great pains to hide the consequences of her economic policies. The political appointees who oversaw INDEC leaned on statisticians to manipulate their results, especially the inflation rate. Graciela Bevacqua, a 24-year INDEC veteran, reckoned that consumer prices in January 2007 rose 2.1%. Her superiors demanded a number between 1.2% and 1.5%. They told her to take a holiday, and sacked her when she returned.
INDEC appeared to respond to criticism by devising a new index, the IPCNu, which monitored prices nationally rather than just in Buenos Aires and its suburbs, as the earlier index had done (see chart). But it, too, swerved from reality, reporting inflation rates 50% lower than independent estimates. The Economist stopped publishing INDEC’s data in 2012. A year later Argentina became the first country to be censured by the IMF for misreporting GDP and prices. With poverty rising, in part because of high inflation, INDEC simply stopped reporting the poverty rate in 2014.
Mr Todesca, who appealed successfully against his fine, arrived to find the institute denuded and demoralised. Just 25% of its staff hold university degrees, he says. The team that gathered data on inflation was “destroyed”. On December 30th Mr Macri declared a “national statistical emergency”, a decree that gives Mr Todesca a free hand to appoint new directors and allows INDEC to suspend publication of data on GDP, inflation, poverty and unemployment until the end of 2016. Mr Todesca has rehired boffins who were ousted by the old regime, including Cynthia Pok, who will resume responsibility for poverty and employment data, and Ms Bevacqua, who is overseeing the construction of a new consumer-price index.
By May Ms Pok intends to put together a “basic food basket” and publish its price, a step towards calculating the level of extreme poverty. She will also create a broader measure of poverty, using a bigger basket of goods and services, including transport. And she hopes to have a “multidimensional poverty index”, which is likely to include such things as access to health care and education, by early 2017.
Getting number in order
Putting together a new consumer-price index is expected to take until September, even though it will probably be based on the widely-used methodology of the International Labour Organisation and, much like the series used until 2014, on prices just in Buenos Aires and its suburbs. The national samples used in the IPCNu may not be reliable enough. Ms Bevacqua says she needs the time to rebuild the teams that collect and analyse the data. Until a new consumer-price index comes out, INDEC advises Argentines to consult two in which it has some confidence: those published by the city of Buenos Aires and by the province of San Luis. Data on GDP and employment will take longer.
This will complicate the government’s efforts to steady the economy. Its early reforms, including a devaluation of the peso and a reduction in electricity subsidies, are pushing up inflation. To contain it, the government hopes to strike a deal on pay with trade unions. In the absence of reliable inflation data, it is “going into the negotiations blind”, says Juan Luis Bour, chief economist of FIEL, a think-tank. Union leaders want pay rises of at least 30%, their forecast of inflation this year. The government hopes to hold the rate to below 25% but may be forced to offer more.
In the medium term, the statistical overhaul will help to normalise the economy. On February 5th Argentina took a step towards normalisation when the government made an offer to pay foreign bondholders who rejected a debt restructuring proposed by Ms Fernández’s government, which prompted the country to default in 2014. The government plans to submit to economic monitoring by the IMF; that is normal for members of the fund, but Argentina has refused it since 2006. Mr Todesca hopes the IMF will soon lift its statistical censure. “Argentina was once a pioneer in Latin America” in publishing data, he points out. Now, just being one of the crowd would be an achievement.
From The Economist print edition: The Americas
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