Argentina Strikes Back at Colombia’s Claim of Bigger Economy

Argentina’s economy minister is striking back at Colombia’s claim that it has overtaken his country to become South America’s second-biggest economy.

Hernan Lorenzino, in messages posted on Twitter today, said data from the International Monetary Fund show that Argentina, with a smaller population, has a gross domestic product more than $100 billion larger than Colombia’s. The gap between the two countries’ nominal GDP is growing, and GDP per capita is also larger, he said.

Juan Carlos Echeverry, before stepping down last month as Colombia’s finance minister, bragged that the Andean nation’s economy was $15 billion larger than Argentina’s as a result of the peso’s slide on the unregulated currency market. In the unregulated exchange market, in which investors buy securities locally in pesos and sell them abroad for dollars, the Argentine peso has declined 25 percent this year to 6.3634 per dollar today. The official rate is 4.7312 pesos per dollar.

“That affirmation isn’t only inaccurate but also intentionally harmful,” Lorenzino wrote on Twitter today, after Echeverry repeated his argument in a Financial Times column published this week.

“This large difference between market rates and official rates means that calculations of the dollar value of Argentine GDP using the official exchange rate are biased upwards,” Echeverry wrote in the FT on Oct. 15. “The evidence points towards an indisputable fact: Colombia has managed to place itself in the leading pack of the region in terms of economic growth, size and long-term potential.”

Echeverry at IMF

Lorenzino today didn’t address Echeverry’s argument about the competing exchange rates, saying only that it’s “an error” to affirm Colombia’s GDP is bigger. Lorenzino's office confirmed that the messages posted on Twitter were written by him.

Echeverry in August said he was resigning as finance minister to apply to become the IMF’s Western Hemisphere director in charge of monitoring the Latin American and Caribbean economies. Former Chilean Finance Minister Nicolas Eyzaguirre resigned from the Washington-based post in July.

If Echeverry wins the job, he’ll have to manage relations between the IMF and Argentina that have deteriorated since the country’s 2001 default on $95 billion in bonds.

The IMF has repeatedly criticized Argentine government statistics it says don’t accurately reflect inflation private economists put over 20 percent.

In turn, President Cristina Fernandez de Kirchner has blamed the IMF for pushing the country into the 2001 financial crisis and since 2006 hasn’t allowed the Washington-based lender to perform an annual review of its finances as required by all members. The IMF executive board is weighing whether to censure Argentina over its refusal to make progress to improve the accuracy of its statistics.

To contact the reporter on this story: Eliana Raszewski in Buenos Aires at eraszewski@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net