The last four years in Argentina were marked by events with infrequent economic impact: a pandemica renegotiation with the IMFa international war high impact, a drought historical, growth with very high inflation, etc. But What stands out most is a national public sector with deficit accounts and surplus provinces. The next question is how did this happen if it is always the Nation that saves the provinces? The answer has several chapters, but the most important begins with the pandemic. Disclaimer: I am going to avoid referring to particular provinces so as not to offend sensitivities.
The “black swan” that the 2020 pandemic implied was an unexpected situation for the provinces that – several of them – were coming from a debt process that had them in an uncomfortable situation.
The first budget relief for many of them came with a renegotiation of the Provincial Development Trust Fund that had previously granted them financial aid for different uses, among them to cancel debt with Cammesa of some state distributors, or a bridge loan that served to overcome illiquidity situations. What happened since then (December 2019)? A large part of the provinces have constantly refinanced themselves until today without amortizing the debt with the National Statel –income that the Nation stops receiving and expenses that the provinces do not carry out-.
Since 2020 with the start of the pandemic – and throughout the government’s administration – the National Treasury Contributions were used – as appropriate – to compensate for the drop in collection observed as a result of COVID-19. It should be noted that the distribution was made based on the co-participation rate to all provinces. More than $152 billion transferred to date (at current values) explain part of the effort made by the National Government.
The special regimes that complement the tax resources of national origin that the jurisdictions receive They presented an interannual increase of 153% for 2020, $117.4 billion more than in 2019, with real growth of around 78%. This increase was mainly driven by the increase in the collection of the Personal Property Tax, due to the modifications introduced by the Law of Social Solidarity and Productive Reactivation in December 2019.
Additionally, the provinces were called to renegotiate their debts in foreign currency, thus clearing significant amounts from their budgets.
This income situation determined a year with a surplus economic result for most of the provinces with the exception of Río Negro, Chubut and Neuquén. In 2021, the surplus result was repeated for all provinces. For 2022, the total information is not published but the trend continued to be positive. In parallel, every year was a loss for the Nation.
As of August 2023, the co-participation received by the provinces grows by 7.1% yoy (with an inflation assumption of 11%).
That is to say, the process of aid through ATN, debt refinancing and special laws, ensured that the provinces did not suffer the drop in resources that they would have experienced if these contributions had not been mediated.
Added to this are the successive readjustments to the Fiscal Consensus, which prevented falls in provincial collections.
For all this, it is striking that a large part of the public sector can choose not to accompany the bonus payment measure announced by the Minister of Economy, having been helped during these years to have a fiscal situation that the Nation does not enjoy. And even more so, when the entire private sector is asked to make the effort that the public sector seems unwilling to make.
National deputy for Salta of UP, former undersecretary of Relations with the Provinces of the Ministry of the Interior, former Minister of Economy of Salta.
Source: Ambito
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