Argentina says poverty levels have declined

By Charles Newbery, Friday, April 25, 2014

Yet economists warn that the level could be more than 30 percent as inflation surges

Yet economists warn that the level could be more than 30 percent as inflation surges

BUENOS AIRES, Argentina – Argentina’s government said Friday that poverty levels have come down sharply in recent years even as concerns swell that more people are going hungry as inflation soars.

The latest official data, compiled by the state statistics agency Indec, shows that the poverty rate fell to 4.7 percent in the first half of 2013 from more than 50 percent in the wake of a 2001-02 economic crisis.

Yet questions of what’s happened in recent months rose this week after Indec declined to publish the latest data, for the second half of 2013, as scheduled Wednesday.

“There is no doubt that the reduction of poverty and indigence has been drastic” since the ruling party came to power in 2003, Jorge Capitanich, the president’s chief of staff, said in a televised press conference.

He said that six million jobs have been created since then, which coupled with rising wages has allowed more people to improve their living standards.

Capitanich said the failure to release the most recent data was a response to “methodological problems” and difficulties in melding old measurement techniques with new ones associated with a national consumer price index launched in February.

Indec has not published the data on baskets of basic goods since January, numbers that are used to calculate poverty and indigence every month.

But this has again raised concerns that the government could be doctoring economic data.

Government data has been under the spotlight since 2007 when officials first started tampering with the numbers to show lower inflation. Indec has shown steady inflation of 10 percent annualized since 2007, while private estimates say it has averaged 20-25 percent a year over the same period and could surpass 35 percent this year.

The low numbers brought questions from the International Monetary Fund, which threatened to throw Argentina out of the group unless it cleaned up its data reporting.

Faced with this threat, the government produced a new national CPI in February showing inflation more in line with private estimates.

Keeping reliable and true data is key for Argentina to mend ties with the IMF. It is also a critical step if it is to return to borrowing on global financial markets for the first time since a 2001 default on $100 billion in bonds.

The country still is in default on about $20 billion, of which $10 billion is owed to the Paris Club. That group of creditor nations, which includes Germany, the U.S. and U.K., won’t negotiate a repayment plan unless the IMF mediates. In turn, the Washington D.C.-based lender won’t mediate until Argentina starts to produce credible economic data.

“The challenge of rebuilding confidence in official economic data is proving a lot harder than the government thought,” said Luciano Cohan, chief economist at Elpysis, an economic consultancy in Buenos Aires.

Earlier this month, the Institute of Ideas and Public Policy, a think-tank run by an opposition lawmaker and former Indec statisticians who left the department after the data tampering started, said that the poverty level reached 36.5 percent in the second half of 2013, up from 32.7 percent in the second half of 2012.

That is far more than Indec’s estimate of 4.7 percent in the first half of 2013 and 5.4 percent in 2012.

“The government wants to hide the fact that poverty is higher today than in the 1990s,” when it averaged 20 percent, Daniel Artana, an economist at the Latin American Economic Research Foundation in Buenos Aires, said on Radio Mitre.

Fernandez de Kirchner has often blamed the neo-liberal economic policies of the 1990s for the collapse of the economy in 2001. The 1990s brought a surge in private investment as the government sold off public assets, yet unemployment and poverty levels rose as companies cut payrolls previously tied to the state.

The president’s administration has pursued welfare policies aimed at helping lift the lower class out of poverty and into the mainstream economy.

But if the poverty rate is 30 percent, as Artana estimates, he said this is a sign that the government’s policies of defending the poor “have been a big failure.”

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