The IMF recently threatened to give Argentina a 'red card' for fudging its growth and inflation rates.
• A version of this post ran on the author's blog, bloggingsbyboz.com. The views expressed are the author's own.
Argentina has done a lot to anger the International Monetary Fund (IMF) over the years, but it looks like the international institution is finally going to punish the country for an issue on which they are completely wrong: bogus statistics. Christine Lagarde has threatened to give Argentina a "red card" if the country doesn't come clean about its real growth and inflation rates. For better or worse, Argentina can follow whatever economic policies they want, but they need to be honest about the results if they want to remain a relevant international economic actor.
The other issue I've been watching closely is the currency control regime, which is slowly tightening upon itself. See FT and Seeking Alpha for two great on-the-ground reports about the effects of the current regulations. The Kirchner government has essentially imposed a tough exit visa system, preventing most Argentines from leaving the country by not allowing them to trade for any foreign currency to spend. Dollars are very hard to obtain across the country.
On top of the political ramifications (voters in democracies don't like these sorts of heavy handed government restrictions), watch for increasing criminal smuggling of dollars and other currencies into Argentina. There is high demand for foreign currency within the country and the government is restricting supply, creating the ideal conditions for a large black market. Various organized crime groups are watching for the opportunity to enter that market and profit.
– James Bosworth is a freelance writer and consultant who runs Bloggings by Boz.