In a speech during the United Nations General Assembly in New York, Argentine President Cristina Fernández de Kirchner replied to the IMF’s warning of sanctions by rejecting its claims that the country is going through a rough economic situation.

International Monetary Fund Managing Director Christine Lagarde warned Argentina during a conference at the Peterson Institute in Washington DC on Monday that it could face sanctions unless it shares reliable information on the country’s growth and inflation rate. According to private economists, the annual inflation in the South American country is at 24 percent, much higher than the official figure placed at 10 percent.

After an Executive Board Meeting on September 17, the IMF expressed its concern due to “the lack of sufficient progress” in improving the quality of the data for the Consumer Price Index for Greater Buenos Aires (CPI-GBA) and Gross Domestic Product (GDP) and called on Argentina to comply with its obligations as a member of the multilateral organization.

Lagarde gave an ultimatum to the Argentine government by saying that if the problem hasn’t been addressed by December 17, it could face a “red card”, meaning it would be dismissed from the multilateral organization. "Argentina is good in football and it certainly understands what we are talking about," she added. The Argentine president responded at the UN General Assembly: “"My country is not a soccer team. It is a sovereign nation that takes sovereign decisions; therefore we will not be subject to any pressure, let alone to any threat."

Top stories this week are likely to include: continued fallout over YPF expropriation; Leon Panetta to South America; Humala approves controversial mining project; and IMF warns of protectionism in Latin America.

Global Response to YPF Seizure: Repsol has threatened to take legal action against any company that invests in YPF SA, its Argentine subsidiary that was nationalized last week. This will complicate efforts by Argentine Planning Minister Julio de Vido to elicit investments in YPF. Beyond Repsol’s response, Argentine President Cristina Fernández de Kirchner faces continued condemnation from Spain and the European Parliament, which is looking at the possibility of imposing trade sanctions on Argentine imports. Petrobras, Brazil’s state-owned oil corporation, has pledged to expand cooperation with Argentina. Look for further official reaction from Europe this week.

Panetta in South America: U.S. Secretary of Defense Leon Panetta departs today for a five-day tour in South America, where he will visit Colombia, Brazil and Chile. A defense official reports that Panetta will stop in Bogotá to evaluate U.S.-funded Plan Colombia and discuss further measures to combat the Revolutionary Armed Forces of Colombia (FARC). Then, he heads to Brasilia and Rio de Janeiro to discuss potential military deals, including Embraer’s participation in a now-cancelled military aircraft contract for the U.S. effort in Afghanistan. AQ Senior Editor Jason Marczak notes, “Although the Embraer deal was worth less than $400 million, getting it back on track would be a huge plus for U.S.-Brazil relations.” Panetta and his Brazilian and Chilean counterparts will also discuss drug interdiction measures off the coasts of Africa and Central America—two of the world’s worst drug transit points.

Peru Approves Conga Mine: Peruvian President Ollanta Humala gave conditional approval last week to the controversial Conga mining project, constructed by U.S.-owned Newmont Mining Corporation. Previously, it had been stalled due to environmental concerns and protests by local Indigenous peoples in the Cajamarca region. Independent environmental auditors recommended a series of changes including larger artificial reservoirs that would allow for the adequate supply of water to local populations; Humala gave Newmont the green light for construction on the condition that these suggestions be met. Cajamarca President Gregorio Santos remains unconvinced, so watch out for the possibility of further local backlash.

IMF Warns of Protectionism: During its spring meetings over the weekend, the International Monetary Fund predicted 3.75 percent growth for the Latin America and Caribbean region this year. The IMF also warned emerging economies against adopting protectionist measures in response to the “accommodative monetary policy” adopted by the U.S. and other developed countries. The 3.75 percent figure represents a moderation of the region’s 4.5 percent growth in 2011. Given Brazil’s criticism of the United States’ monetary behavior, pay attention to whether Latin American economies heed the IMF’s advice.

*RELATED – Angelina Jolie Visits Refugees in Ecuador: In her capacity as a United Nations High Commissioner for Refugees ambassador, Angelina Jolie visited displaced Colombian refugees in Ecuador over the weekend. Read an Americas Quarterly dispatch on refugees in Ecuador from the Winter 2012 issue.

Meeting with Mexican President Felipe Calderón yesterday, International Monetary Fund (IMF) Managing Director Christine Lagarde praised the Mexican government for its “strong fiscal, financial and monetary policies,” which have contributed to the country’s development in spite of the global economic downturn. She also lauded Mexico’s “solid” financial institutions just one day ahead of Mexico assuming leadership of the G-20 for the next 12 months.  

Mexico was the second stop on Lagarde’s three-day tour of Latin America—her first since taking office in July. Prior to her meeting with Calderón, Lagarde also met with Mexican Secretary of Finance and Public Credit José Antonio Meade and Agustín Carstens, the country’s central bank chief. On Monday, Lagarde met with Peru’s president, finance minister, and Central Reserve Bank president in Lima. She traveled to Brazil this morning, where she will also meet with top officials, including President Dilma Rousseff.

The international debt crisis has figured prominently in Lagarde’s discussions, with analysts predicting ahead of her trip that she would seek support to help contain the European debt crisis. In a press release issued yesterday, Lagarde said, “I am confident that under Mexico’s leadership the G-20 will be effectively contributing to the global agenda, including putting a stop to the debt crisis in Europe.” Regarding the IMF’s own role, Lagarde told reporters that, while ready to help resolve the euro debt crisis, the IMF would also “be attentive and spare resources…for those countries that are bystanders of the crisis.”

For its part, Mexico “will be more than willing to collaborate,” said Carstens, although Calderón also noted that he believed the euro zone has adequate tools to resolve its current crisis.

Latin America and the Caribbean are likely to grow 5.7 percent this year—twice the expected recovery for the United States—say the World Bank and International Monetary Fund in a report released this week. Regional output of goods and services is expected to continue to grow in 2011, although at the slower rate of 4 percent.

Brazil, Peru and Uruguay are expected to grow 7.5, 8.3 and 8.5 percent, respectively. The report highlighted Brazil as an emerging economic behemoth, thanks to credit growth and increased exports of iron ore, beef, soy, and sugar on the international scene, combined with strong consumption and poverty reduction at home.

Experts attribute the better-than-expected pace of Latin American growth—despite the global financial crisis—to a decade of good fiscal and debt management, strong commodity prices, growing foreign investment, and increased trade links with Asia.

The World Bank and IMF report cautioned against complacency, urging commodity-exporting countries in particular not to waste huge capital inflows on domestic financial excess, but instead set up windfall savings funds for emergencies. In addition, Luis Alberto Moreno, president of the Inter-American Development Bank, warned U.S. businesses not to miss out on the opportunity to develop ties to fast-growing economies. He said that for years, free trade in the U.S. has inaccurately been synonymous with loss of jobs. He also pointed out that, as a result of strong macroeconomic performance in the region and various free trade agreements, U.S. exports to Latin America increased 82 percent between 1998 and 2009.