Foreign debt in Argentina
MercoPress ran a story about how Argentina has paid down US$32 billion worth of foreign debt by using Central Bank reserves under the nine years of the Kirchners, between current President Cristina Fernandez Kirchner (“CFK”) and her immediate predecessor (also her husband), now-deceased former President Néstor Kirchner.
Speaking at a conference, Central Bank President Mercedes Marco del Pont explained that despite the payments, Central Bank reserves remain strong. Admitting that it is not ideal to replace one debt with another, Marco del Pont asserted that “it’s better to be indebted with the central bank than with foreign creditors.”
Marco del Pont described this strategy as “the centre piece of the policy to recover sovereignty by cutting indebtedness.” Even a cursory overview (to read more on the Falklands/Malvinas, click here and here; for more on oil policy, click here) reveals that national sovereignty is one of the key issues in modern Argentine politics.
Yet, questions remain as to whether CFK truly seeks national sovereignty for Argentina, or if it’s really just about appearances.
If the Kirchner Administrations really have paid off US$32 billion in foreign debt, that’s pretty impressive. But I couldn’t help but remember this February 2012 article by The Economist, explaining why the official inflation rate reported by the Argentine government would be removed from The Economist’s indicators page:
Since 2007 Argentina’s government has published inflation figures that almost nobody believes. These show prices as having risen by between 5% and 11% a year. Independent economists, provincial statistical offices and surveys of inflation expectations have all put the rate at more than double the official number (see article). The government has often granted unions pay rises of that order.
What seems to have started as a desire to avoid bad headlines in a country with a history of hyperinflation has led to the debasement of INDEC, once one of Latin America’s best statistical offices.
It’s certainly possible that things really are going as well in Argentina as reported. But given the track record on reporting inflation rates in the “Kirchner era”, it might be worth fact-checking other government claims related to financial stability.