In May 2014, INDEC released new calculations of the value and the evolution of the economy (GDP) from which lower growth figures emerged. After reporting Economy earlier that year that in 2013 the economy had grown by 4.9%according to the monthly estimator of economic activity, just a few weeks later the INDEC changed the base year from 1993 to 2004 to calculate the change in the economy. And so the growth in 2013 settled at 2.9%.
This change had a major impact on the financial world because Argentina had to pay so-called GDP coupons if the economy grew above 3.25%.
Immediately, financiers and economists interpreted that this modification of the calculation was to avoid having to activate several million dollars for the principal and interest portion of the debt securities. And this was reflected in the collapse in the price of GDP coupons both in dollars issued and under Argentine legislation those governed by New York law
With this and other arguments, several investment funds have filed a lawsuit against Argentina and now a London ruling obliges the country to pay 1,330 million dollars for those official indices.
In turn, it was interpreted among specialists that the base change of GDP was a consequence of other subsequent manipulations the displacement of some Indec directors since 2007.
In January 2007 they dismissed the director of the Pricing area, Graciela Bevacqua. In February it was time for the director of Living Conditions, Clyde Trabuchi. Weeks later, the then head of INDEC, Lelio Mármora, resigned.
With the official argument that the inflation index had been miscalculated and “inflated” and that it increased the payment of CER-adjusted debt, the INDEC’s “intervention” started spreading month-by-month lower inflation rates and which led to a decrease in the interest account, of the so-called CER bonds.
From the government, they highlighted throughout that period the “savings” represented by the displacement of INDEC officials, accused of having favored the interests of creditors for years.
With the “leaving a hand” in the Price Index – which is evident by comparing the numbers of the National INDEC with the data of the Provincial Directorates and other measurements – other Indicators have been altered, such as the values of the basic baskets of indigence and poverty since they had to be in line with those of inflation.
Also, among others, those of economic growth because the underestimation of inflation data has led to a higher GDP calculation. This happened because by deflating the billing of the different activities with a lower inflation rate, higher growth resulted.
So, from manipulating price indices to tampering with GDP data, there was a straight line. And the “savings” due to the minor adjustment of the CER bonds triggered the GDP coupon. Announcements popped up that the economy had grown less than had been released a few weeks earlier.
For all this, today INDEC continues to warn “that the statistical series published after January 2007 and up to December 2015 must be considered with reservations, except for those already revised in 2016 and their dissemination expressly states this”.
Source: Clarin
