Argentina

Following the recent Latin American crisis that severely weakened the Argentinean province of Cordoba's financial position, a new administration implemented the Eme... Mostrar más + rgency Law of 1996 to curtail fiscal spending. In spite of this, Cordoba remains in deep financial crisis and requires a fundamental reform of the public sector, in order to: (1) attain financial creditworthiness, and (2) increase the efficiency of public expenditures. This report evaluates the nature of the crisis and Cordoba's current financial conditions and prospects, and recommends a set of short- and medium-term reforms which could facilitate the restructuring of the public sector. The short-term recommendations for reform include: replacing the 1996 Emergency Law; presenting a new balanced budget for 1996; ceasing to use the Certificate of Cancellation of Debt (CECOR) as a means of payment; cutting personnel expenditures by $270 million in 1996; privatizing the Banco de la Provincia, EPEC (an electricity company), and the Provincial Department for Water and Sanitation (DIPAS); closing the Banco Social; signing the Pacto Fiscal; transferring the social security system to the national government; and creating a more effective social safety net. The medium-term recommendations include implementing reforms in the sectors of health, education, social welfare and civil service; streamlining municipal coparticipation; increasing revenues and capital expenditures; and establishing an economic, statistical, and financial data base. The report concludes with an addendum listing measures implemented since October 1995 that constitute an initial effort toward: (1) fiscal reforms in the areas of public employment, public salaries and employment conditions, the provincial pension system, and debt reconfiguration; and (2) structural reforms in the areas of health, revenue-sharing with the municipalities, taxes, provincial banks, the energy company, the judiciary, and water and sanitation. Mostrar menos -