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Let there be light
Financial Times
August 17, 2008

By Jude Webber

Change is coming at last to Argentina's state statistics institute, Indec, and its fantasy inflation figures. Politicians usually supine in their support for the government have started calling for greater clarity, and expectations are increasing that President Cristina Fern ndez will soon name a new Indec chief, ending the control of Guillermo Moreno, the Internal Trade Secretary, over the key data.

Mr Moreno once described by Ms Fern ndez's husband and predecessor, Nestor Kirchner, as "gentler than Lassie" is more commonly seen as an aggressive Rottweiler who ejected respected statisticians at the start of 2007, packed the institute with malleable functionaries and began doctoring inflation data in a failed bid to conceal rising prices.

But the government embarrassed itself last week when inflation figures widely considered ridiculously low a 0.4 percent rise in prices and a 0.8 fall in food prices were issued hours after it launched a bond buy-back. That operation was itself a damage-limitation attempt, designed to reverse an 11 per cent fall in the local bond market after Argentina sold a bond to Venezuela - only to see Venezuelan banks swiftly dump it. Private economists reckon the inflation figure was about three times lower than the real rate of inflation, and few shoppers share Indec's view on food price trends.

Buenos Aires made a half-hearted attempt to restore credibility in the inflation numbers with the launch of a new index in June, but methodology remained murky and Mr Moreno remained in control. His exit is the expected to be the condition for a new candidate taking on the job.

Ms Fernandez is not expected to exile Mr Moreno entirely he is likely to stay on in the secretariat, but with limited powers - but she will do her own battered popularity and Argentina's crumbling credibility an enormous favour by ending the government's self-destructive manipulation of important data. Then she can get on with other pressing problems like renegotiating Argentina's Paris Club debt, which is preventing Argentina from raising money on international capital markets. That has forced the country to sell bonds at 15 per cent to Venezuela a bet that has now turned risky.