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									                                                               PUBLIC FINANCE


                                                                                                                                                   VI
         Public Finance

         I. Results of the National Non                                         shows a reduction, in this case by $ 371.1 millions (Graph
             Financial Public Sector                                            6.1). As for the year-accumulated figure, the overall result was
                                                                                a $ 6,791.6 million deficit. The strong deterioration as com-

         In the fourth quarter of 2000, the overall result of the               pared to the previous year ($ 2,023.2 millions) becomes an

National Non Financial Public Sector (NNFPS) based on actu-                     improvement if the important revenues from privatizations

al income and outlays1 recorded a $ 2,884.4 million deficit.                    obtained in 1999 are taken into account, which turned out to

Compared to the same quarter of 1999, there was an improve-                     be highest of the whole decade ($ 2,579 millions). The in-

ment of $ 443 millions, as the result of higher revenues, includ-               crease of revenues ($ 182.7 millions), and specially the reduc-

ing privatizations for $ 72.1 millions, and an adjustment over                  tion of expenditures ($ 260.3 millions) influenced the im-

total expenditures. If those extraordinary capital revenues are                 provement of overall deficit of the quarter (Table 6.1).

deduced, the deficit with respect to the 4° quarter of 1999 still
                                                                                          Total revenues of the year, which amounted to $

                               GRAPH 6.1
                               National Non-financial Public Sector Overall Result
                               In million of pesos
                                            1997                     1998                     1999                     2000
                              0

                        -1.000

                        -2.000
                        -3.000
                        -4.000
                                       -4.277                   -4.074 -4.170
                        -5.000                 -4.582                                     -4.768
                        -6.000
                        -7.000
                                                                                                                   -6.792 -6.936
                                                                                                -7.348
                        -8.000
                                           Overall Result                         Overall Result before Privatiz.


1 The NNFPS is made up of the National Administration, State owned companies and Trust Funds. In turn, the National Administration is made up of the
Central Administration, Decentralized Agencies and Social Security institutions. Within the latter there are the former provincial pension funds. Besides,
the National Administration includes, within tax revenues and expenses for current transfers, the revenues co-participated to the Provinces. Thus, the global
tax pressure of the public sector can be seen when making up the national Public sector.


                                                                                                                                                         1
                                                                                  PUBLIC FINANCE

TABLE 6.1
Non Financial Public Sector - Cash Basis
In million pesos
                                                              I-99        II-99       III-99      IV-99       I-00       II-00      III-00     IV-00      Variation IV 00 / IV 99
                                                                                                                                                           Million $       %
I       CURRENT REVENUE                                      14.172,1 14.135,7 14.330,0 13.038,9 13.752,0 15.023,8 14.232,1 13.161,3                             122,4          0,9
       - Tax Revenue                                           9.265,8     9.994,4     9.754,5     9.610,9     9.583,7   11.084,2   10.149,6    9.854,3           243,4          2,5
       - Contributions to Social Security                      3.143,2     2.506,3     2.870,9     2.371,4     2.887,3    2.474,1    2.940,3    2.382,6            11,2          0,5
       - Non-Tax Revenue                                       1.099,8       907,7     1.074,5       390,3       466,0      841,3      477,3      301,3           -89,0        -22,8
       - Sales of Goods and Services of Civil Services            56,7        46,8        50,9        42,4        44,4       50,3       44,3       46,0             3,6          8,5
       - Sate-owned Companies Operating Income                   295,7       257,2       260,1       260,3       235,3      258,9      259,8      285,2            24,9          9,6
       - Property Income                                         217,0       376,3       250,2       311,6       248,7      230,3      309,0      192,2          -119,4        -38,3
       - Current Transfers                                        93,9        47,0        68,9        52,0       286,6       84,7       51,8       99,7            47,7         91,7
II CURRENT EXPENSES                                          14.771,0 14.344,8 15.342,8 15.588,5 15.136,3 14.756,7 15.203,6 15.362,4                           -226,1          -1,5
       - Consumption and Operating Expenses                    2.598,8     2.507,8     2.599,8     2.749,1     2.432,1    2.302,5    2.454,2    2.387,5          -361,6        -13,2
           . Wages                                             1.863,8     1.749,2     1.904,1     1.836,8     1.822,4    1.661,9    1.786,4    1.628,4          -208,4        -11,3
           . Goods and Services                                  634,7       705,4       674,0       863,5       579,7      541,9      556,3      637,2          -226,3        -26,2
           . Other current expenses                              100,3        53,2        21,7        48,8        30,0       98,7      111,5      121,9            73,1        149,8
       - Yield                                                 2.090,2     1.858,4     1.934,3     2.341,0     2.389,8    2.376,6    2.114,2    2.775,8           434,8         18,6
           . Interest                                          2.090,2     1.858,3     1.934,1     2.341,0     2.389,7    2.376,6    2.114,1    2.775,6           434,6         18,6
             .. Interest on Domestic Debt                         68,7        54,4        53,8        46,7        45,8       35,5       31,6       39,2            -7,5        -16,1
             .. Interest on External Debt                      2.021,5     1.803,9     1.880,3     2.294,3     2.343,9    2.341,1    2.082,5    2.736,4           442,1         19,3
           . Other Yield                                           0,0         0,1         0,2         0,0         0,1        0,0        0,1        0,2             0,2            -
       - Social Security Benefits                              4.360,2     4.026,7     4.699,4     4.350,1     4.386,8    4.073,9    4.686,1    4.284,5           -65,6         -1,5
       - Other Current Expenses                                    0,2         0,2         0,3         0,2        10,0        0,0        0,1        0,5             0,3        150,0
       - Current Transfers                                     5.721,6     5.951,7     6.109,0     6.148,1     5.917,6    6.003,7    5.937,1    5.914,0          -234,1         -3,8
           . To the Private Sector                             1.529,5     1.633,2     1.510,1     1.738,2     1.556,8    1.541,9    1.505,2    1.551,3          -186,9        -10,8
           . To the Public Sector                              4.176,9     4.288,8     4.579,6     4.393,3     4.351,2    4.451,0    4.414,5    4.333,7           -59,6         -1,4
             .. Provinces and Gov. of City of Buenos Aires     3.748,1     3.878,2     4.106,8     3.907,6     3.927,9    4.043,2    3.969,0    3.883,0           -24,6         -0,6
                 …Shared Revenue                               3.160,2     3.267,3     3.272,7     3.189,5     3.133,7    3.292,5    3.266,4    3.254,6            65,1          2,0
                 …Prov. Agreement Guarantee                        0,0         0,0         0,0         0,0       161,8       49,3       39,9       52,5            52,5            -
                 …Special Laws                                   125,8       135,3       118,9       193,9       121,2      135,0      129,1      130,8           -63,1        -32,5
                 …Others                                         462,1       475,6       715,2       524,2       511,2      566,4      533,6      445,1           -79,1        -15,1
             .. Universities                                     424,1       404,1       469,2       482,5       421,5      404,6      443,5      448,8           -33,7         -7,0
             .. Others                                             4,7         6,5         3,6         3,2         1,8        3,2        2,0        1,9            -1,3        -40,6
           . To the External Sector                               15,2        29,7        19,3        16,6         9,6       10,8       17,4       29,0            12,4         74,7
       - Other Expenses                                            0,0         0,0         0,0         0,0         0,0        0,0       11,9        0,1             0,1            -
III CURRENT SAVINGS (I-II)                                     -598,9      -209,1 -1.012,8 -2.549,6 -1.384,3              267,1     -971,5 -2.201,1             348,5       -13,7
IV CAPITAL RESOURCES                                          1.832,0       844,5     62,7     39,5     67,8              129,9      103,8     99,8              60,3       152,7
       - Privatizations                                        1.779,9       794,0         5,0         0,2        2,8        0,7        69,1      72,1             71,9            -
       - Others                                                   52,1        50,5        57,7        39,3       65,0      129,2        34,7      27,7            -11,6        -29,5
V      CAPITAL EXPENDITURE                                     814,4       859,0       686,0       817,3       718,6      695,4      706,0      783,1           -34,2          -4,2
       - Direct Real Investment                                  176,5       166,2       136,4       155,7      105,9       72,1        85,6     138,4            -17,3        -11,1
       - Capital Transfers                                       607,8       683,3       543,7       652,2      590,9      619,9       617,1     638,9            -13,3         -2,0
           . Provinces and Gov. of City of Buenos Aires          535,8       607,5       487,9       572,5      538,9      548,4       567,5     563,1             -9,4         -1,6
                …Special Laws                                    262,6       280,3       244,7       311,0      255,4      271,3       274,9     264,3            -46,7        -15,0
                …Others                                          273,2       327,2       243,2       261,5      283,5      277,1       292,6     298,8             37,3         14,3
           . Others                                               72,0        75,8        55,8        79,7       52,0       71,5        49,6      75,8             -3,9         -4,9
       - Financial Investments                                    30,1         9,5         5,9         9,4       21,8        3,4         3,3       5,8             -3,6        -38,3
           . To provinces and Gov. of City of Buenos Aires         0,2         0,4         1,5         1,6        0,3        0,1         0,8       0,3             -1,3        -81,3
           . Others                                               29,9         9,1         4,4         7,8       21,5        3,3         2,5       5,5             -2,3        -29,5
VI      TOTAL REVENUE (I+IV)                                 16.004,1    14.980,2    14.392,7    13.078,4    13.819,8 15.153,7 14.335,9 13.261,1                182,7         1,4
VII     TOTAL EXPENSES (II+V)                                15.585,4    15.203,8    16.028,8    16.405,8    15.854,9 15.452,1 15.909,6 16.145,5               -260,3        -1,6
VIII    GLOBAL SURPLUS (VI-VII)                                 418,7      -223,6    -1.636,1    -3.327,4    -2.035,1   -298,4 -1.573,7 -2.884,4                443,0       -13,3
IX      SURPLUS BEFORE PRIVATIZATIONS                        -1.361,2    -1.017,6    -1.641,1    -3.327,6    -2.037,9   -299,1 -1.642,8 -2.956,5                371,1       -11,2
X       PRIMARY EXPENDITURE (*)                              13.495,2    13.345,5    14.094,7    14.064,8    13.465,2 13.075,5 13.795,5 13.369,9               -694,9        -4,9
XI      TOTAL PRIMARY SURPLUS (VI-X)                          2.508,9     1.634,7       298,0      -986,4       354,6 2.078,2     540,4   -108,8                877,6       -89,0
XII     PRIMARY SURPLUS excl. PRIVATIZ.                         729,0       840,7       293,0      -986,6       351,8 2.077,5     471,3   -180,9                805,7       -81,7


(*) Excludes payment of interest
Source: Treasury Secretariat, Ministry of Economy



 2
                                                               PUBLIC FINANCE

56,570.5 millions, was affected by the above-mentioned fall of                            Again, total expenditures were reduced in the fourth quar-
capital resources and by expenditures, which turned out to be                   ter. In this period, the contraction amounted to $ 260.3 millions,
higher ($ 138.3 millions) due to the strong increase of external                focused on consumption and operating expenses (-$ 361.6 mil-
debt interests ($ 1,503.9 million more).                                        lions) and on current transfers (-$ 234.1 millions). This adjust-
                                                                                ment allowed supporting higher costs of external debt services,
         During the fourth quarter, both current revenues and                   which rose by $ 442.1 millions. On the contrary, total expendi-
capital revenues showed increases. Tax revenues in particular                   tures grew $ 138.3 millions during the year, as a consequence of a
exhibited a good performance (increased $ 243.4 millions dur-                   strong increase of interests ($ 1,432.4 millions) which could not-
ing the quarter and $ 2,046.2 millions during the year), as a                   be offset with drops in other items such as: salaries and wages (-$
                             2
result of the fiscal reform . The decrease of non-tax revenues (-               454.8 millions), goods and services (-$ 562.5 millions), current
$ 89 millions and –1,386.4 millions during the quarter and                      transfers (-$ 158 millions) and capital expenditures (-$ 273.6
the year, respectively) and of property revenues (-$ 119.4 mil-                 millions). Thus, if primary expenditures are analyzed, which in-
lions and -$ 174.9 millions, respectively) counterbalanced the                  clude payment of interests, there appears a decrease of $ 1,294.1
above-mentioned increase. Social security contributions in-                     millions (-2.4%). Social security benefits, in turn, did not show
creased slightly during the quarter (0.5%) but fell during the                  any quantitative change compared to the previous year.
year (-$ 207.5 millions), as the result of the drops of employ-
ment and the reduction of pension contribution percentages.                               With these results, the fiscal deficit target agreed upon
Another item that grew, as per its annual figures, was current                  with the IMF in the Economic Policy Memorandum3 for
transfers ($ 261 millions), whereas the rest showed drops: state-               2000, set at $ 6,700 millions was complied with. In fact, the
owned companies’ operating revenues (-3.2%) and sale of goods                   $ 6,589.4 million deficit was $ 110.6 millions lower than the
and services of state agencies (-6%). In turn, capital resources                target re-scheduled in December (Table 6.2)4 . In the last
fell by 85.6% due to extraordinary revenues recorded in 1999.                   months of 2000, a series of factors had an unfavorable influ-

            TABLE 6.2
            Compliance wit IMF targets
            Public Sector - Cash Basis
            Result Excluding Privatizations - In millions of pesos
                                                                                                                  2000
                                                                                           Execution           IMF Prog. (*)       Difference
                                                                                                (1)                 (2)              (1)-(2)
             Result for non-financial public sector                                                   -6.936
             Quasi-fiscal BCRA result (IMF measurement) (*)                                              347
             Overall result                                                                           -6.589              -6.700               111

             (*) Estimated
             Source: Treasury Secretariat, Ministry of Economy

2 Act Nº 25.239 of December 1999. A summary can be consulted in the Economic Report N° 31.
3 The fiscal result agreed upon does not include income from privatizations but does consider BCRA’s quasi-fiscal result and the deficit of the provincial
pension funds transferred to the National Administration.
4 The original agreement with the IMF, that included a fiscal deficit target for the whole 2000 of $ 5,300 millions, has been reframed in December by signing
a new Memorandum that increased fiscal imbalance to $ 6,700 millions (1.8% of GDP).



                                                                                                                                                         3
                                                      PUBLIC FINANCE


                                   GRAPH 6.2
                                   Primary surplus and interest expenditure
                                   In million of pesos
                        12000

                        10000           Primary Surplus before privatiz.

                         8000           Interest

                         6000

                         4000

                         2000

                             0

                        -2000
                                     1993    1994      1995         1996    1997   1998    1999     2000



ence over the economy, provoking an exaggerated increase of                  Primary surplus without privatizations, i.e., ex-

country risk and of interest rates. These circumstances led the       cluding public debt interest expenses, amounted in

IMF to implement a financial assistance package to ensure             2000 to 1% of GDP, whereas in the same period of

public financing for the coming year, so as to allow the re-start     1999 this ratio was 0.3%. This surplus managed to

of external credit transactions.                                      finance 28.2% of interest expenses (Graph 6.2).


        The arrangement of the financial assistance package
                                                                            II. Current revenues of the
of US$ 39,700 millions received contributions from the
                                                                           National Non Financial Public
International Monetary Fund, the Interamerican Develop-
                                                                                       Sector
ment Bank, the World Bank, Spain, the securities’ market
maker banks and Argentine institutional investors, aimed at
covering the financial needs of several years’ National Bud-                 During the fourth quarter of 2000, current

gets, until December 2003. In the case of debt swaps, they            revenues amounted to $ 13,161.3 millions ( Table

include maturities for the next 5 years. Within the total,            6.1), 0.9% higher than the same period of the pre-

US$ 25,400 millions will be available before December 2001.           vious year. As the result of the tax reform, those
                                                                      that grew the most were tax revenues and current
        The preliminary execution in the first bimester 2001          transfers and, on the contrary, those that dropped
showed a deficit of the NNFPS (without the Central Bank’s             the most were property income and non-tax reve-
quasi-fiscal result) of $ 1.506,3 millions, so the maximum            nues. As for the year-accumulated figure, these vari-
imbalance allowed for the rest of the quarter would be $              ation signs remain the same, with revenues that
593,7 millions.                                                       amounted to $ 56,169.2 millions.



 4
                                                              PUBLIC FINANCE

           II.1 Tax Revenues of the National                                             In January and February 2001, there were collection
                    Administration5                                            increases (2.6% and 0.7%, respectively) (please see Graph 6.3
                                                                               and Table A.6.3 of the Appendix). The January year-on-year
                                                                               increase was focused on Other Taxes, in which mainly payment
         In the fourth quarter of 2000, tax revenues of the Na-
                                                                               facilities revenues are booked. In February, the increases in DGI
tional Administration6 amounted to $ 11,875.1 millions, 1.8%
                                                                               Income tax, Excise co-participated taxes and Personal Assets tax
higher than in the same period of 1999, thus being the third
                                                                               were counterbalanced by lower revenues for VAT, fuel tax,
consecutive rise after a one year and a half period of negative
                                                                               employers contributions to social security and taxes on foreign
rates. In turn, annual revenues amounted to $ 49,102.2 mil-
                                                                               trade (mainly over imports), with a slightly positive balance.
                                    ,
lions, which represents 17.2% of GDP a percentage that im-
plied an increase of tax pressure given the lack of economic
                                                                                                       Evolución by Tax
growth. The 3.1% increase as compared with the previous year,
which was basically the result of higher revenues from the fiscal                        In the fourth quarter of 2000, value added tax collec-
reform introduced at the beginning of 2000 and of higher                       tion (VAT), net of rebates, fell by 1.3% year-on-year, as a con-
revenues from payment facilities regimes, did not manage to                    sequence of the drop of economic activity. This fall was offset
recover 1998 levels, when tax collection had been somewhat                     by a lower level of rebates to exporters and higher income from
higher than 50 thousand millions pesos. The low activity evi-                  payment facilities regimes, mainly. However, during the year,
denced stopped the full effect of the measures taken in relation               the variation was positive, with a 1.3% increase, thanks to the
to taxes linked to consumption and corporate profits and had                   wide scope of the tax on automotive transportation and private
also a negative influence on the gradual reduction of social                   health services, as well as of the previously mentioned lower
security and tariffs percentages.                                              rebates to exporters and payment facilities plans. This behavior
                                                                               was limited by the fall of imports and by the use of Trade-in
         During the year, the trend to increase the participation
                                                                               Plan certificates for the payment of the tax, aside from the effect
of taxes on income became stronger, at the time the importance
                                                                               of economic activity fall.
of those applied on foreign trade and social security decreased.
The same as in previous years, there was a major concentration                           Collection of Income Tax grew 8.9% year-on-year in
in just a few taxes. From VAT, Income tax and social security                  the last quarter and 13.2% in the year. The growth recorded is
contributions, 77% of total tax collection is obtained and the                 the result of the tax reform of the beginning of the year7 , the
percentage climbs to 85% if the tax on Fuels is included.                      changes in the advance regime for corporations8 and the facil-


5 The following text is based on the analysis made in the Report on Tax Collection of the fourth quarter 2000 of the National Bureau of Fiscal Research and
Analysis.
 6 This figure of fiscal revenues corresponds to collections from DGI (taxes), ANA (Customs) and the Social Security system (family allowances are recorded
with their net value). In Table 6.1, however, “tax revenue” and “Social Security contributions” also include other sources (Tobacco Special Fund, Electric
Energy Fund and contributions of Army and Security Forces social security) and take into account the gross value of contributions to the system of family
allowances.
 7 There was a reduction of minimum taxable amounts, special deductions and family allowances deductions, and the percentages for the different tranches
of the scale were increased. At the beginning of the year, income for salaries withholdings rose and, since August, income from other profits did the same.
Since June, advances for individuals were paid taking into account the decrease of admitted minimums as well as the scale increases.
 8 The changes in advances meant the replacement of the scheme of 11 advances with a percentage of 9% for another of 10%, whereby the first advance
percentage is 25% and the rest is 8.33%. For 2000, a temporary regime was established with percentages from 2% to 25%.



                                                                                                                                                        5
                                                                     PUBLIC FINANCE

TABLE 6.3
Total Tax Revenue
In million pesos
                                           I-99         II-99       III-99       IV-99         I-00         II-00        III-00      IV-00       Variation IV00/IV99
                                                                                                                                                 Million $      %
I - DGI (excl. Soc. Sec. Syst.)
Income Tax                                2.022,3      2.621,7       2.250,2      2.345,8      2.141,9      3.324,8      2.434,6      2.553,9       208,1         8,9
VAT
     National                               3.742,0       3.522,0      3.463,0      3.423,0      3.489,0      3.480,0      3.495,6     3.351,0        -72,0       -2,1
     Imports                                1.472,0       1.499,0      1.677,0      1.716,0      1.413,7      1.485,0      1.580,0     1.573,2       -142,8       -8,3
     Gross                                  5.214,0       5.021,0      5.140,0      5.139,0      4.902,7      4.965,0      5.075,6     4.924,2       -214,8       -4,2
     Rebates (-)                              443,0         517,0        476,4        532,0        374,9        300,0        340,1       452,1        -79,9      -15,0
     Allocation from Payment Plans             62,0          58,0         43,0         62,0        117,0        152,0        201,8       137,0         75,0      121,0
     Net Total                            4.833,0      4.562,0       4.706,6      4.669,0      4.644,8      4.817,0      4.937,3      4.609,1        -59,9       -1,3
Reimbursements (-)                          105,8        151,5         141,2        175,6        142,0        146,0        152,4        142,2        -33,4      -19,0
Excise Taxes                                387,7        350,0         360,4        377,0        388,3        357,2        379,1        403,9         26,9        7,1
Lottery Prizes                               25,5         18,5          25,5         18,8         29,1         13,8         15,3         24,1          5,3       28,2
Transfers of Real Estate                     14,6         18,1          15,2         15,5         12,5         13,1         14,6         14,1         -1,4       -9,0
Minimum Notional Income Tax                 196,5        237,8         153,4        152,0        145,7        151,9        138,2        164,4         12,4        8,2
Interest Paid                               109,6        196,4         192,5        196,3        221,4        222,0        209,4        202,3          6,0        3,1
Other shared taxes (1)                        9,5          6,4           9,0         10,7         17,4        104,1         77,3         28,0         17,3      161,7
Stamp Tax                                    11,7         11,4          13,4         13,6         10,5         11,8         11,1         12,6         -1,0       -7,4
Personal Assets                              18,0        205,7         120,7        201,2        109,1        350,0        248,3        316,9        115,7       57,5
Fuels and Gas                               790,5        908,7         883,9      1.004,9        785,8        878,3        909,8        904,4       -100,5      -10,0
Excise Tax on Insurance Policies             67,6         73,2          59,0         55,5         55,6         55,8         47,0         35,7        -19,8      -35,7
Other Taxes (2)                             233,0        483,3         279,1        231,0        315,0        359,8        207,7        242,5         11,5        5,0
Total DGI (excl. Soc. Sec. Syst)          8.613,7      9.541,7       8.927,7      9.115,7      8.735,2     10.513,5      9.477,2      9.369,6        253,9        2,8
II - FOREIGN TRADE
Export Duties                                   2,9         13,7          7,9           0,5          2,1         21,9          6,3         1,7          1,2      240,0
Import Duties                                 543,1        517,1        573,8         593,2        491,6        476,9        493,8       475,5       -117,7      -19,8
Statistics Tax                                 15,1         11,7         11,2          12,5          9,8          9,4          9,5         9,8         -2,7      -21,6
Total Foreign Trade                         561,1         542,5        592,9        606,2        503,5        508,3        509,6       487,0        -119,2      -19,7
III - SOCIAL SECURITY
Employee Contributions                      1.695,2       1.419,3      1.624,4      1.413,0      1.688,0      1.475,2      1.662,6     1.434,4         21,4        1,5
Employer Contributions                      2.091,8       1.598,6      1.828,8      1.475,7      1.743,2      1.503,1      1.786,9     1.493,6         17,9        1,2
Payment Plans                                  21,6          15,1          8,0          6,6          0,0          0,0          0,0         0,0         -6,6          -
Other Social Security (3)                      92,5          85,3         85,7         87,9         94,4        111,6        116,9       101,0         13,1       14,9
Capitalization (-)                          1.174,1       1.006,4      1.168,9      1.002,4      1.184,9        996,5      1.120,4     1.006,4          4,0        0,4
Delays and Temporary Contributions (-)         63,9          43,0        -87,6         37,0        -83,4         57,4        -73,7         4,1        -32,9      -88,9
Total Social Security                     2.663,1      2.068,9       2.465,6      1.943,8      2.424,0      2.036,1      2.519,7      2.018,5        74,7         3,8
TOTAL TAX RESOURCES                      11.837,9     12.153,1      11.986,2     11.665,7     11.662,8     13.057,8     12.506,5     11.875,1       209,4         1,8

(1) Includes high incomes since second quarter of 2000
(2) Excise tax on gas oil, cigarettes, broadcasting, cinema tickets, Monotributo, emergency vehicle tax and other minor taxes.
(3) Includes Monotributo social security
(3) Incluye Monotributo previsional
Source: National Bureau of Fiscal Research and Analysis - Treasury Secretariat - Ministry of Economy



ity payment plans. This result took place in spite of the lower                        the tax on common fuel10 .
revenues evidenced under the concept of balances of the tax
presentations of corporations and individuals.                                                    Excise co-participated taxes increased 7.1% with re-
                                                                                       spect to the same quarter of the previous year due to the chang-
           The lower collection of the fuel tax, both in the fourth                    es introduced by the tax reform on the percentages of certain
quarter (-10%) and in the year (-3.1%), was the result of lower                        categories (beverages) and the taxation of goods and services
                        9
taxed sales of fuel , whose effect was softened by the increase of                     that had not been taxed up to then (automobiles, beverages,



9 Taxed sales on fuels decreased by 11.1%.
10 Since January 2000, the taxes on common and special gasoline were made equal, when the former were increased by $0,10.



 6
                                    PUBLIC FINANCE

                 GRAPH 6.3
                 Evolution of Tax Collection
                 In million pesos
                 Total Resources

 1999 4,800
 2000 4,600
 2001
      4,400

       4,200

       4,000

       3,800

       3,600

       3,400
               jan    feb    mar    apr   may   jun   jul   aug   sep    oct    nov    dec



                Gross VAT

1999 1,750
2000 1,700
2001 1,650
       1,600
       1,550
       1,500
       1,450
       1,400
       1,350
       1,300
                jan   feb     mar   apr   may   jun   jul   aug   sep    oct    nov    dec
               Total income
1999   1,500
2000   1,400
2001   1,300
       1,200
       1,100
       1,000
        900
        800
        700
        600
        500
               jan    feb    mar    apr   may   jun   jul   aug    sep    oct    nov    dec


                                                                                              7
                                          PUBLIC FINANCE

                      GRAPH 6.3 (Cont.)
                      Evolution of Tax Collection
                      In million pesos
                      Fuel and gas
    1999    450
    2000
            400
    2001

            350

            300

            250

            200

            150
                    jan   feb    mar   apr      may   jun     jul     aug     sep      oct         nov     dec

                     Import duties
           220
      1999
      2000 210
      2001 200

             190

             180
             170

             160

             150
             140

             130
                    jan   feb    mar   apr      may   jun    jul     aug     sep     oct         nov     dec

                    Social Security
     1999   1,200
     2000
            1,100
     2001

            1,000


             900

             800

             700

             600
                    jan   feb    mar      apr   may    jun     jul     aug     sep         oct     nov         dec


8
                                                              PUBLIC FINANCE

cellular phones). Due to the same reasons, there was a 3.6%                          III. Expenses of the National Non
annual increase. In the case of the tax on cigarettes, on the                               Financial Public Sector
contrary, there was a decrease attributable to a sales drop.

                                                                                         In the fourth quarter of 2000, current expenditures of
         The fall of foreign trade taxes collection amounted to
                                                                               the NNFPS (i.e., the National Administration, state-owned
19.7 in the fourth quarter and to 12.8% in the year. The de-
                                                                               companies and the former provincial pension funds) amount-
crease of import duties (-19.8% and -13%, respectively in the
                                                                               ed to $ 15,362.4 millions, -1.5% less than in the previous year.
periods analyzed) was the result of the application of the Sched-
                                                                               Capital expenditures, which represented 4.8% of the total,
ule for Common External Tariff Convergence of the Mercosur,
                                                                               decreased even more, 4.2%. (Table 6.1). If annual outlays are
the use of certificates granted to automotive companies as re-
                                                                               considered, there appears a rise of current expenditures with
turn for fines paid11 for the payment of the tax and the reduc-
                                                                               respect to 1999 (0.7%) and a drop of capital expenditures (-
tion of import duties for capital goods12 .
                                                                               8.6%) that provoked a reduction of its participation within the
                                                                               total to 4.6%, the lowest figure since 1993.
         Revenues derived from social security recorded a 3.8%
year-on-year increase in the last quarter, but showed a reduc-
                                                                                         With the exception of payments for debt interests and
tion of 1.6% in the year. The quarter’s increase was affected by
                                                                               other less important ones, which increased, the rest of current
the payment facility plans and by higher resources from the
                                                                               expenditures undergone important adjustments.
former provincial pension funds. On the contrary, in the annu-
al variation predominated the negative effect of the decrease of                         The structure of current expenditures shows that the
employers contributions percentages, in the number of em-                      participation of interests paid by the NNFPS more than dou-
ployees contributing to the state public regime due to transfers               bled since 1993 until absorbing, in 2000, 15.2% of the total.
                                    13
to the private pension system and the fall in the number of                    On the contrary, consumption and operating expenditures re-
self-employed contributors14 (net of the transfer to the Mono-                 duced (10 percentage points in 7 years) due to lower wages,
tributo Regime [Simplified Regime for Small Taxpayers]).                       which passed from 15.9% to 10.9%, and so did purchases of
                                                                               goods and services (another 5 percentage points). Social securi-
         The modification of the percentage of the Personal As-
                                                                               ty benefits only grew 1.4 percentage points in the two years
sets Tax provoked a considerable increase of the amount collect-
                                                                               considered and amounted to 27.5% in 2000. In turn, current
ed (57.5% and 87.7% in the quarter and the year, respective-
                                                                               transfers, the most important category that accounts for 37.5%
ly), together with the retroactive effect on 1999 and the differ-
                                                                               of the total, increased 3 percentage points, mainly originated
ent maturities that took place in both periods.
                                                                               by those made to the private sector, since those received by the



11 The automotive companies used –for the payment of the tax- the certificates granted to them as rebate for the payment of fines they had paid in 1995 due
to their balance of trade imbalance during the period 1992-94.
12 According to the Resolution 255 and 256 of the Ministry of Economy, the Extraterritorial Import Duty (EID) for capital goods was reduced from 6% to
3%, and an Imports Regime was established for goods belonging to Major Investment Projects that contribute to improving industrial competition.
13 In the fourth quarter, 16% of contributing employees and 40.4% of self-employed contributors belonged to the state public regime, whereas in the same
period of 1999, said percentages were 17.7% and 41.8%, respectively.
14 The number of employees contributing to the general regime recorded an 8.9% decline.



                                                                                                                                                       9
                                                                        PUBLIC FINANCE

public sector (within which there are the provinces) only did so                   to $ 26,508 millions, and amortizations, repurchase, swap and
by 0.3%.                                                                           pre-payments, to $ 19,755 millions; this caused an increase of
                                                                                   indebtedness as the result of transactions of $ 6,753 millions.

                              IV. Public debt                                               Exchange differences during the year allowed for the
                                                                                   reduction of debt by $ 2,521 millions, mainly due to the de-
            The Argentine public debt as of December 31, 2000,                     valuation of the euro against the dollar, but it is worth remem-
amounted to $ 128,018 millions, a figure equivalent to 44.9%                       bering that in the last quarter these differences were positive by
of GDP. The strong increase of indebtedness of the fourth                          $ 1,038 millions, thus increasing debt by that amount.
quarter ($ 4,352 millions) provoked a rise of $ 6,141 millions
for the year. Some variations apply corresponding to transac-                               As for public debt classified by type of creditor, it contin-
tions that do not belong to the period, such as securities place-                  ues growing the one instrumented through bonds, public secu-
ments for the consolidation of debts accrued in prior fiscal years                 rities and Treasury bills (76.7%), of which 95.5% is denominat-
($ 1,291 millions) and exchange differences ($ -2,521 mil-                         ed in foreign currency. Debt with multilateral agencies increased
lions). Besides, $ 396 millions correspond to compounding of
interests of securities and bonds that will start paying amortiza-
                                                                                   TABLE 6.5
tion services and interests in the future (Table 6.4).                             Total Public Sector Debt (1)
                                                                                   By Type of creditor - As of 12/31/00
            In 2000, debt placements of the public sector amounted                              Type of Creditor                              Millon Pesos
                                                                                   MEDIUM AND LONG-TERM TRANSACTIONS                                122,910
                                                                                   Bilateral                                                             4,561
                                                                                      Paris Club                                                          2,375
TABLE 6.4                                                                                                                                                 2,186
                                                                                      Other Bilateral Agencies
Public Sector Debt - Flow Analysis (*)                                             Multilateral                                                         21,764
In million pesos                                                                      IDB                                                                 7,622
                                                                         123,666      IBRD                                                                9,054
Balance of Public Sector Debt at 09-30-00
 Securities issued to consolidate debt                                       589      IMF                                                                 5,053
 Exchange differences                                                      1,038      FONPLATA                                                               29
 Capitalization of interest of securities and bonds                          130      FIDA                                                                    6
 Debt issue and repayment                                                  2,595   Others                                                                1,045
  Issues                                                                   5,473   Private Banking                                                       2,461
      Securities issued                                                    2,726   Government Bonds and Securities                                      93,079
      Sundry disbursements (Bilateral and multilateral loans, others)      2,938      In domestic currency                                                4,410
      Treasury Bills                                                        -191      In foreign currency                                                88,668
  Payments                                                                 2,878   SHORT-TERM TRANSACTIONS                                               5,108
      Repayments                                                           2,878   Treasury Bills                                                        5,108
       -Government Bonds                                                   1,531      In domestic currency                                                    0
            Amortization                                                   1,531      In foreign currency                                                 5,108
           Repurchases, exchanges and cancellations                            0
                                                                                   TOTAL DEBT                                                          128,018
       -Multilateral agencies                                                552
       -Bilateral agencies                                                   292
       -Others                                                               503   (1) Domestic and external debt of the financial and non-financial
Total Public Sector Debt at 12-31-00                                     128,018      public sector. The former includes the debt of the BCRA and that
                                                                                      taken by govenment-owned banks guaranteed by the Nation, but
(*) Includes short-term transactions                                                 excludes the debt destined to their own financing.
Source: Treasury Secretariat, Ministry of Economy                                  Source: Treasury Secretariat, Ministry of Economy



 10
                                                                    PUBLIC FINANCE

$ 1,452 millions, thus being $ 21,764 millions (17% of the                                V. Provinces: Distribution of national
total), and debt with the Paris Club and other bilateral agencies,                                      resources
in turn, continued its downward trend accounting for 3.6% of
the total ($ 4,561 millions). With respect to private banking,                                   During 2000, total national resources transferred to
there was a steep fall in the last quarter, which places its participa-                provincial governments were $ 16,404.4 millions, a figure slight-
tion in 1.9% of total creditor at the end of 2000.                                     ly higher than the same period of 1999. Of said total, 98.7%


   TABLE 6.6
   Distribution of National Resources (1)
   In Millions Pesos
                                                                                                        Variation                     Percentage share
                                                             2000              1999             Million $         %                 2000           1999
    Federal revenue-sharing                                      12,472.8          12,269.1             203.7                1.7            77.2           77.0
      Net federal revenue-sharing                                10,615.4          10,401.5             213.9                2.1            65.4           65.5
      Service transfers (2)                                       1,307.8           1,318.0             -10.1               -0.8             8.3            8.1
      Compensatory Fund for Prov. Imbalances                        549.6             549.6               0.0                0.0             3.5            3.4
    Social Security System                                          162.8             163.9              -1.2               -0.7             1.0            1.0
      V.A.T.                                                        124.0             129.8              -5.8               -4.4             0.8            0.8
      Personal Assets                                                38.7              34.1               4.6               13.5             0.2            0.2
    Distribution of Fuels                                         1,369.3           1,255.5             113.8                9.1             7.9            8.5
      Highway Authority                                             288.8             299.0             -10.2               -3.4             1.9            1.8
      Fund for Electric Power Infraestructure                       144.4             149.5              -5.1               -3.4             0.9            0.9
      Special Fund for Electr. Distr. in the Int.                    50.7              45.2               5.4               12.0             0.3            0.3
      National Housing Fund (3)                                     885.5             761.8             123.7               16.2             4.8            5.5
    Education Fund                                                    4.7               3.0               1.8               60.0             0.0            0.0
    Income Tax Law 24.621                                         1,633.6           1,661.2             -27.6               -1.7            10.4           10.1
      Unsatisfied Basic Needs (4)                                   980.1             999.7             -19.6               -2.0             6.3            6.1
      Surplus from the Fund for the GBA (5)                         213.5             221.5              -8.0               -3.6             1.4            1.3
      Fixed Amount Law 24.699 (6)                                   440.0             440.0               0.0                0.0             2.8            2.7
    Personal Assets (Law 24.699) (7)                                332.3             291.3              41.0               14.1             1.8            2.1
    Régimen de la energía eléctrica                                 155.7             145.2              10.5                7.2             0.9            1.0
    Régimen Monotributo                                              65.9             112.8             -47.0              -41.6             0.7            0.4
    Total                                                        16,197.2          15,902.0             295.1                1.9           100.0          100.0

    (1) Pursuant to the Federal Commitment [Compromiso Federal] of December 1999 (Act Nº 25,235, article 3),
        transfers to the provinces under any concept (tax co-participation and specific funds) will be treated as a unique global
       amount, equivalent to $ 1,350 millions per month, which the Federal Administration guarantees
       both as lower and upper limit. Said amount isdistributed among the corresponding regimes.
    (2) Education and health services were transferred to provincial jurisdiction in 1992. This transfer covered 1,905 schools,
       112,000 teachers and 14,200 non-teaching staff, 19 health establishments with 92,000 public sector workers and
       22 institutes for minors and the family with 1,700 employees.Financing is by means of a withholding of federal shared
       tax revenue prior to secondary distribution
    (3) Transfers related to FO.NA.VI includes payment of collateral and do not include payment of SVOA-BIRF
    (4) El 4% de la recaudación del impuesto a las ganancias (neto de la detracción de sumas fijas mencionadas en la nota 5) se distribuye entre
       todas las jurisdicciones provinciales, excluida la de Buenos Aires, conforme al índice de Necesidades Básicas Insatisfechas.
    (5) 10% of revenues (net of detraction of fixed amounts mentioned at note 5) up to an annual amount of $650 million is
        assigned to the province of Buenos Aires for social welfare programs. If 10% exceeds that limit, the surplus is shared
        among the rest of the provinces.
    (6) According to section 5 of Law 24,699, before distribution is made of income tax revenues a deduction of $580
         million annually should be made, to be distributed as follows: $ 120 million to the Integrated Pension System,
        $ 20 million for advances from the National Treasury and $ 440 million to the provinces.
    (7) In the second half of 1996 the specific allocation to the Social Security System of the funds from this tax
        was suspended and it is now distributed among the provinces, according to Act Nº 23,548 (Nation-Provinces-FATN).
    Source: Treasury Secretariat, Ministry of Economy



                                                                                                                                                                  11
                                                       PUBLIC FINANCE

corresponded to automatic transfers.                                   result of complying with the Federal Pact executed in Decem-
                                                                       ber 1999 among the Provinces and the National Administra-
                                                                       tion, which set forth a fix monthly amount along fiscal year
                 V.1 Automatic Transfers
                                                                       2000 of $ 1,350 millions under the concept of Tax Co-partic-
                                                                       ipation and Specific Funds to the Provinces.
       Under the concept to automatic transfers and guaran-
tee clause, the amount sent to provincial jurisdictions amount-                 The $ 295.1 million increase of remittances was basi-
ed, in 2000, to $ 16,197.2 millions (Table 6.6), 1.9% more             cally due to a $ 213.9 million increase (2.1%) of net federal co-
than in 1999.                                                          participation, to $ 123.7 millions (16.2%) of the fuels tax
                                                                       (National Housing Fund) and $ 41 millions of Personal Assets.
       The increase of resources with said destination was the         The Simplified Regime for Small Taxpayers (Monotributo), in


                  TABLE 6.7
                  National Revenues - Distribution by Province
                  Automatic Transfer
                  In Million Pesos
                                                2000           1999                     Change              Share %
                                                                             Absolute            %           2000
                   Buenos Aires                    3,862.3         3,824.4              37.9          1.0           23.8
                   Catamarca                         415.6           412.1               3.4          0.8            2.6
                   Córdoba                         1,312.3         1,292.7              19.5          1.5            8.1
                   Corrientes                        581.3           570.4              10.9          1.9            3.6
                   Chaco                             719.2           705.8              13.3          1.9            4.4
                   Chubut                            301.2           297.8               3.3          1.1            1.9
                   Entre Ríos                        747.9           737.3              10.6          1.4            4.6
                   Formosa                           543.4           531.9              11.6          2.2            3.4
                   Jujuy                             448.7           441.2               7.6          1.7            2.8
                   La Pampa                          308.3           302.4               5.9          1.9            1.9
                   La Rioja                          329.0           322.0               7.1          2.2            2.0
                   Mendoza                           653.7           643.5              10.2          1.6            4.0
                   Misiones                          536.1           524.4              11.7          2.2            3.3
                   Neuquén                           311.6           305.3               6.3          2.1            1.9
                   Río Negro                         404.9           396.1               8.8          2.2            2.5
                   Salta                             598.3           587.0              11.2          1.9            3.7
                   San Juan                          508.2           499.0               9.2          1.9            3.1
                   San Luis                          364.3           356.0               8.4          2.3            2.2
                   Santa Cruz                        306.3           295.4              10.9          3.7            1.9
                   Santa Fe                        1,366.2         1,358.5               7.8          0.6            8.4
                   Santiago del Estero               624.1           611.5              12.6          2.1            3.9
                   Tucumán                           720.6           709.2              11.4          1.6            4.4
                   Tierra del Fuego                  233.8           188.4              45.4         24.1            1.4
                   Total                        16,197.2       15,912.2            285.0             1.8        100.0

                   Source: Treasury Secretariat, Ministry of Economy


 12
                                                             PUBLIC FINANCE

turn, provoked a decrease of remittances for $ 47 millions.                               Table 6.7 shows the distribution by province of these
                                                                                  automatic transfers. Given that the co-participation remained
        In December 2000, the National Administration and                         constant in the 2 years considered, there appear no changes in
the provincial authorities executed a “Federal Commitment for                     the distribution structure with the exception of Tierra del Fue-
Growth and Fiscal Discipline” which contemplates the presen-                      go, which received a higher flow of funds.
tation of a new co-participation of federal taxes bill and increas-
es the monthly allocated amount to $1.364 millions, also with
                                                                                                         V.2 Other transfers
the double character of lower and upper limit during fiscal
years 2001 and 2002. At the same time, the parties agreed not
to increase their respective primary expenses in order to achieve                         Aside from automatic transfers, the provinces received
fiscal balance, agreed to preparing several years of budgets (3                   from the National Administration other non-automatic trans-
years) and to the broad publicity of their fiscal accounts. It was                fers for $ 207.2 millions, less than half (-58%) the figure trans-
also agreed upon that they would work on a tax harmonization                      ferred in 1999.
so as to allow for the elimination of taxes with distortive effects
on economic activity, investment and employment.                                          From said total, $ 94.1 millions corresponded to the


                  TABLE 6.8
                  Non Automatic Budget Transfer to Provinces
                  In million pesos
                                            2000         1999         Change           Share %                  A.T.N. FUND
                                               (1)                                   2000      1999       2000 (2)     PART.% (2)/(1)
                  Buenos Aires                 12.0         15.7          -23.4          5.8       3.2           10.8             89.4
                  Catamarca                     1.7          3.3          -50.6          0.8       0.7            1.7            100.0
                  Córdoba                       5.1          9.1          -43.9          2.5       1.9            5.1            100.0
                  Corrientes                    8.9         46.4          -80.9          4.3       9.4            8.9            100.0
                  Chaco                         7.2          7.6           -5.2          3.5       1.5            7.2            100.0
                  Chubut                       26.7         22.4           19.4         12.9       4.5            2.2              8.3
                  Entre Ríos                    2.6         22.4          -88.5          1.2       4.5            2.6            100.0
                  Formosa                       1.4         16.8          -91.9          0.7       3.4            1.4            100.0
                  Jujuy                         3.2         12.7          -74.4          1.6       2.6            3.2            100.0
                  La Pampa                     10.5         23.6          -55.6          5.0       4.8            3.2             31.0
                  La Rioja                      8.6        123.0          -93.0          4.2      24.9            8.6            100.0
                  Mendoza                       7.0          3.3          111.6          3.4       0.7            7.0            100.0
                  Misiones                      3.1          5.8          -45.7          1.5       1.2            3.1            100.0
                  Neuquén                      23.1         37.0          -37.6         11.1       7.5            3.0             13.0
                  Río Negro                    25.3         24.3            4.1         12.2       4.9            4.6             18.3
                  Salta                         1.9         12.7          -84.8          0.9       2.6            1.9            100.0
                  San Juan                      4.8         27.7          -82.6          2.3       5.6            4.8            100.0
                  San Luis                      2.2          0.9          158.4          1.1       0.2            2.2            100.0
                  Santa Cruz                   28.9         23.7           22.2         14.0       4.8            0.3              1.0
                  Santa Fe                      4.6         10.1          -54.2          2.2       2.1            4.6            100.0
                  Santiago del Estero           3.8         17.7          -78.3          1.8       3.6            3.8            100.0
                  Tucumán                       2.3         11.3          -80.0          1.1       2.3            2.3            100.0
                  Tierra del Fuego             12.2         16.1          -24.2          5.9       3.3            1.5             12.3
                  Total                      207.2       493.7           -58.0        100.0     100.0           94.1             45.4

                  Source: Treasury Secretariat, Ministry of Economy




                                                                                                                                                13
                                                     PUBLIC FINANCE

Fund of National Treasury Contributions, $ 313.6 millions          entes. In turn, the subsidy for gas consumption for the Patago-
less than the same period of 1999. The decrease of these discre-   nia region was $ 28 millions higher, whereas no transfers were
tional items deepened in those provinces which had been the        made for the former Regional Development Fund [FDR] since
most benefited the previous year, such as La Rioja and Corri-      the works that originated them finished (Table 6.8).




 14

								
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