The fund announced on Wednesday that it has lifted the censure on Argentina’s official inflation data and that its reporting is now in line with international standards.
IMF managing director Christine Lagarde attributed this to the “extraordinary efforts made by the new Argentinean administration to strengthen the national statistics agency and produce reliable and trustworthy data”.
Improving Argentina’s official statistics agency, Indec, was a key election promise of the country’s president, the free-market advocate Mauricio Macri, who took office late last year.
Indec had faced long-standing accusations of manipulating inflation data to give the impression the economy was performing better than it was.
The fund’s executive board issued a declaration of censure in early 2013 requesting Argentina make improvements before the end of the year.
Its failure to do so could have led to sanctions, including a loss of access to fund financing and compulsory removal from the fund.
Since taking office in December last year, the Macri has implemented sweeping reforms to increase confidence in Argentina’s economy and make it more market-friendly.
He has overseen a substantial devaluation in the currency, slashed subsidies and the public sector payroll and resolved a dispute with creditors that had seen Argentina isolated as a financial pariah.
While he has been commended by pro-market economists and institutions around the world, he has yet to receive the same reception from the Argentinean citizens.
The economy remains in recession and inflation is still rising rapidly. Within the first two months of office, Macri was facing national public sector strikes as angry workers protested soaring inflation and job cuts.
The IMF, however, has showered Macri’s methods with praise. Before he took office, relations between the fund and the Argentine government had soured to the point where the IMF no longer even reviewed the health of the country’s economy.
In an assessment by its executive board, published yesterday, the fund said the new government had confronted a difficult economic situation with an “ambitious and much-needed transition” towards better economic policy.
However it recognised that the “reversal of the serious imbalances and distortions inherited” from the previous administration, led by left wing Christina Hernandez, had had an “adverse near-term impact”.
It forecast a 1.8% GDP contraction this year, before a rebound to 2.7% growth in 2017. This will rise to almost 3% the following year, according to the fund.