Argentina: economists 'speculating' with inflation

BUENOS AIRES, Argentina (AP) -- Argentina is trying again to criminally prosecute people who publish independent inflation data, just as Congress opens debate on a 2014 budget that assumes economic good times next year.

The government is predicting strong annual economic growth of 6.2 percent, inflation of just 10.4 percent and a peso dropping only 10 percent against the dollar.

Independent economists call these numbers wildly optimistic, and say that Argentina's growth prospects are troubling and inflation is actually running more than twice as high. They maintain that illegal currency trading reflects much greater pressure to formally devalue the currency than the government has acknowledged.

As Economy Minister Hernan Lorenzino proposed the budget to Congress, Commerce Secretary Guillermo Moreno went to court, accusing four different consulting firms of criminal "speculation" for publishing inflation data that contradicts official reports.

Among those Moreno targeted Thursday was economist Orlando Ferreres, who estimates inflation is rising by 23.8 percent annually. He called the accusations against him "ridiculous" in an interview with Radio La Red on Friday, and said they only make sense in "an upside-down world."

Moreno also asked the judge to approve similar charges against economists with M&S, Buenos Aires City and Finsoport SA consultancies. If charged, tried and convicted of "speculation," they could face two years in prison.

But Moreno also faces potential charges himself that carry a two-year prison term. He's accused of abusing his authority as a public official by levying fines of $500,000 pesos (roughly $87,700 at today's official rate) against these economists for publishing independent data. Courts annulled the fines on appeal, but the legal battle is headed for the Supreme Court.

Argentina's inflation numbers have been in doubt since 2007, when President Cristina Fernandez's late husband and predecessor, Nestor Kirchner, had political appointees change the methodology of the official statistics agency, INDEC.

To protect themselves from Moreno, the private economists have been giving their monthly estimates to opposition lawmakers, who announce an average inflation rate each month in Congress. That rate has consistently shown prices increasing at least twice as fast as official numbers, which are in such disrepute that the International Monetary Fund no longer reports them.

"INDEC is the real fraud," Ferreres said. "That's the only one the judges should consider, because it is easily proven."

The proposed budget calls for roughly $162 billion in national government spending, which is a 29 percent increase in peso terms on revenues of roughly $192 billion.

The plan also says Argentina's central bank will spend $9.8 billion in foreign reserves on bond payments in 2014, a number that does not include U.S. court-ordered payments of $1.4 billion to holders of defaulted debt that has gone unpaid since the country's 2001 economic crisis. Lorenzino defended this gamble — which risks pushing Argentina into another default if it refuses to pay the plaintiffs — saying Argentina "has lowered its debts while growing the economy and maintaining political autonomy and sovereignty."