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According to ex-head of INDEC: 'Argentina has a covered-up default'
Ambito Financiero
August 25, 2008

Ex-head of INDEC V ctor Beker said today that "Argentina is in default because what has been done with the organization's indices is a kind of covered-up default."

As such, he said that "the INDEC situation is of such gravity that it needs the intervention of Congress to have it taken away from the control of the Executive and is converted into an autonomous entity."

He also said that if the judicial mandate to detail the changes in the Consumer Price Index (CPI) prospers, "it could generate a avalance of lawsuits against the State by the holders of bonds adjusted by inflation, among them the AFJP."

Thus, in radio interviews, Beker refered to inflation, the management of INDEC, the problems that the country could have facing its fiscal obligations, and the role that Congress plays in the Argentine economy.

"This is a government that generates inflation on all sides, and it's also done on the side of expectations. What's grave is that they backfeed inflation when it's believed that it's 25%, everyone works under the hypothesis of 30 points, in order to cover themselves. It's like a self-fulfilling prophecy," the economist said.

"If there isn't price stability, the economy will continue to slow down and we are going to enter a process of stagflation," Beker said while he also assured that the increase in costs of living the "number one" problem in Argentina.

"To combate inflation it's necessary to have specific economic policy measures in the place of trying to fool the population with a falsified index, that really isn't fooling anyone," the ex-head of INDEC said.

The economist from the University of Belgrano also said that the economy "has already cooled down" and indicated that "some two months ago" it entered a "substantially pronounced" process of deceleration, fundamentally due to inflation.

"Argentina is at this moment in default, because what has been done with the indices at INDEC is a kind of covered up default."

About that, he said that the question to face over the normalization of the state agency will be the bonds adjusted to inflation, to "avoid an avalance of lawsuits."

"There have been previous judicial actions that were very serious over manipulation of the figures at INDEC, including one skillful one which clearly demonstrated manipulation in the case of the Provice of Mendoza," the economist added.

As such, he said that the National Congress "must intervene" in the situation of the statistics and census agency, to take it out from being in the orbit of the Executive Branch, and become an autonomous and autarkic entity like PAMI or the Central Bank.