Argentina Accused Of Economic Tall Tales



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In Latin America, it was common at one time to exaggerate economic progress for short-term political gain. Most countries improved their record keeping when they joined the globalized economy. But Argentina is accused of vastly underestimating inflation and poverty, while offering rosy economic growth estimates. Besides upsetting Argentines, it also affects Americans who invested in the country.

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And as Senator Webb pursues the art of the possible, we turn to the art of accounting. In Latin America it was once common to cook the books to exaggerate economic progress for short-term political gain. Most countries have improved their record-keeping as they integrated into the global economy. It appears one country has not - Argentina, which is now accused of vastly underestimating inflation and poverty while offering rosy economic estimates. That's got Argentines upset and it also affects Americans who invested in the country. NPR's Juan Forero tells us why from the capital, Buenos Aires.

(Soundbite of singing)

JUAN FORERO: Workers at the National Statistics Institute protest with a song about how high-level officials lie to the country, lie about the poverty rate, lie about inflation.

(Soundbite of singing)

FORERO: Institute workers like mathematician Marcela Amada(ph) say they were pressured from above to doctor numbers and they say they were demoted when they didn't cooperate. But she says they were only telling the truth.

Ms. MARCELLA AMADA (Mathematician): (Unintelligible) the numbers are wrong or are suspected to be wrong.

FORERO: The workers started complaining about this two years ago. The Attorney General's Office quickly started investigating. The prosecutor who opened the case is Manuel Garrido(ph).

Mr. MANUEL GARRIDO (Prosecutor): There was a crime because members of the government modified the numbers of the inflation rate.

FORERO: No one has been charged, but seemingly everyone knows about the manipulations. Indeed, polls show only one in 10 trust the government's inflation figures.

Economics say it's serious, that the real inflation rate over the last year may be as high as 15 percent - that's three times more than the official rate.

Poverty, which is calculated based on inflation and other data, may be twice the government's official 15 percent rate. And economic growth last year may have been two or three points lower than the government's rosy seven percent estimate.

The impact of the suspected meddling isn't just felt here; it's felt globally. That's because Argentina has issued nearly 50 billion dollars in inflation linked to bonds and the lower the official inflation number, the less Argentina has to pay debt-holders.

Robert Shapiro heads a Washington group that is trying to recoup Americans' investment in Argentina. He places the blame squarely on the Kirchners - that is, President Cristina Elizabeth Fernandez de Kirchner and her husband Nester, her predecessor.

Mr. ROBERT SHAPIRO (American Task Force Argentina): I don't think they're mainly trying to mislead an international audience. I think they're mainly trying to mislead a domestic audience about the inflation, and it's very damaging to Argentina's reputation in the world.

FORERO: Cathy Malachowsky(ph) is president of a New Jersey community college professors association, an association whose pension is tied up in Argentine bonds.

Ms. CATHY MALACHOWSKY: This is just one more that we have to be concerned with as far as whether we're going to have our pension, as we are expecting when we get to retire.

FORERO: Some may find the talk of inflation-adjusted bonds and debt swaps confusing. Here in Argentina, though, many people see it all quite clearly.

(Soundbite of banging)

FORERO: Butchers at the Progresso Market in a bustling Buenos Aires neighborhood soften up cuts of veal.

(Soundbite of people talking)

FORERO: Alicia Infanta(ph) buying meat from Jose Marchicella(ph) says she notices price hikes every week.

Ms. ALICIA INFANTA: (Through translator) In general, no one should intervene in the collection of the statistics. I think that only the numbers should do the talking.

FORERO: NPR tried to seek comment from the Economy Ministry, the Statistics Institute, and the presidency. They all decline to answer questions.

Mr. AMADO BOUDU (Economy Minister): (Spanish spoken)

FORERO: The new economy minister, Amado Boudu, did recently talk to reporters about the controversy. He said he'd oversee a review of the institute's methodologies and put an end to the doubts about the numbers. Economist Juan Bour, though, doesn't believe the government will admit its mistakes.

Mr. JUAN BOUR (Economist): Mainly because it would be costly in political terms to admit such a manipulation. It would be the recognition of significant failure.

FORERO: At the Statistics Institute, workers say they'll continue to talk and protest about the data doctoring until it stops.

(Soundbite of singing and clapping)

Juan Forero, NPR News, Buenos Aires, Argentina. Transcript provided by NPR, Copyright NPR.