Argentina, where economists are threatened with jail for producing inflation estimates that run contrary to official statistics, was censured by the IMF last week for cooking its numbers. In 2007, Nestor Kirchner, the deceased former president whose wife, Cristina Fernandez, took over the reigns of power when he died, fired the economists who produce the country’s official statistics and replaced them with statisticians happy to indulge him with bogus numbers. The government claims that inflation hovers around 11%; privately, economists calculate the rate to be over 25%.
Argentine resentment, though previously tamed by populist policies, seems to be reaching new levels. This past weekend, on a bus back from Uruguay, where he was vacationing with his family, Axel Kicillof, the side-burned Marxist economics professor who has been the poster boy for Argentina’s economic policies, was heckled and insulted (link in Spanish), according to local press. Kicillof responded to the jeers with silence, while his wife pleaded with the hecklers and his children wailed.
The Argentine government’s lack of credibility has long angered international investors, such as those holding inflation-linked bonds, who have lost $6.8 billion due to inflation since 2007, or the American hedge fund managers who decided to take matters into their own hands when they took hostage an Argentine ship stationed in Ghana as collateral for bonds the Argentine government refused to pay.
But Fernandez, who tweeted, “Why haven’t we seen any IMF sanction against those who enriched themselves while bankrupting the world?” after finding out about the IMF’s censure, has mostly enjoyed popularity at home. Nationalizing the country’s largest oil company (the former owner of which is suing Argentina for compensation) , and taking an aggressive stand against Great Britain in the ongoing dispute over control of the Falklands Islands, initially garnered Fernandez, a charismatic speaker, a large degree of popular support.
But now discontent over Argentina’s economic policies is rising fast. There were huge pot-banging demonstrations late last year against harsh currency controls, and Argentines are growing weary of their leader’s habit of demonizing her critics as public enemies (as she did last month when Ricardo Darín, the country’s most popular actor, suggested that the president reveal the source of her wealth).
Last weekend’s bus-heckling incident, which generated heated commentary in local press and social media, highlights rising dissatisfaction with Argentina’s economic policies even among the lower and middle classes. According to comments on Twitter, Kiciloff’s hecklers were haranguing him about the provenance of the dollars he used to purchase his bus tickets. Argentines’ ability to exchange local currency for dollars was seriously curtailed last fall, after Kicillof explained to the nation that the dollar reserves used to finance Argentina’s import-substitution policy (a policy which enjoyed the zenith of its popularity in Latin America in the 1950s and 60s, wherein local industry is favored over foreign imports) were running out. One user on Twitter responded to those asking how Kicillof got his dollars with a sardonic, “The same way you did”.
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