Transcript
Argentina: Many Failed Attempts on the Way to State Reform
María Ester García Sindicatura General de la Nación
The opinions expressed in this paper strictly represent the author’s personal judgments and they could differ from the opinion sustained by the institution where she works. The author is very grateful to Carlos Ballanti, Marina Caracini and Lia Gens for their contribution.
1
Abstract Major state reforms in Argentina were legislated and to a great extent implemented during the 90’s. They didn’t result in all the renovation and benefits foreseen but, in a contra factual exercise, it is an unpleasant idea to think of Argentina without those reforms. Some of them were addressed to modify State according to the Washington Consensus premises, other were designed to enhance public management issues in order to support the first ones. These reforms don’t fully accomplish the proposed outcomes. The processes that create policies are central at the time of explaining the failure. The reform process results in a weaker, a little smaller but not less expensive State and impoverished in its human capital and values. Internal control matters followed the changes produced.
2
“Politics lies at the core of management reform, not vice versa. Management reforms have their genesis and sustenance in the degree to which they help solve political problems.” Larry Jones & Donald Kettl
Introduction
Trying to explain our paradoxical recent past very often seems to be an impossible task. Lots of political and economical inconsistencies paved our road. In the paper it will be exposed, in a limited scope, the ordinate sequence of the most important effort made to modernize State in Argentina, with special consideration to the public management policy making process involved and its impact on control issues. The author will try also to explain the factors that undermine these reform processes. This case seems an interesting and complex example of a major effort that was successful at its beginning and was then dilapidated by political ambitions and managerial incapacity in just 10 years. The main research questions addressed in this paper are: Was the state reform in Argentina successful? How did the public management policies perform during the 90’s state transformation? Were those policies the best to fit proposed reforms? Which factors could explain the outcomes achieved? Which issues need to be addressed in order to accomplish the goal of a modern and effective state? This paper is organized in four sections, and continues in some way, the analysis made in previous works 1. So, many of already stated arguments will be presented. In section 1 a brief and partial analysis introduces the context in which the state reform performed. Section 2 reviews the experiences of Argentina on modernizing its Public Sector and the related public management policies implemented. Section 3 deals with the consequences of reform on control issues, with regard to internal control practices. Section 4 offers some concluding remarks.
Section 1: Context
Argentina has had in the past a strong economy, a significant middle class segment, high levels of literacy and infatuated itself as a rich true European enclave in Latin America. It was in 1913 in the sixth world position due to its GDP per capita. All of this remains in the collective unconscious. The 1930 crisis motivated an abrupt change in its conditions. As a consequence of the fall in commodities prices, the export incomes fell a 34% and the production a 14%. Imports were suspended by the crisis and the domestic industry substituted them, 3
favored by exchange controls. The state intervened throughout regulation in order to stabilize markets. From this deep crisis a new State role emerged: one that related economics with social matters. This welfare state reach its momentum during Perón administrations (1945-1955). State managed agricultural and industrial promotion, the credit, insurance and international commerce. As times goes by, different populist and military governments ruled the country while the model exhausted and the economy tried to find new ways. That richness has been lost along with values associated to rule of law and democracy. In the late 80’s Argentina faced a severe crisis, both financial and energetic, assuming the dominant role that an over-dimensioned State had played in its situation. It was the reform momentum and state reform was enforced. Due to its good performance, Argentina became an enfant gâtée of international capitals and multinational lending institutions as model of those benefits derived from the free market reforms adoption. The new century found us in the middle of an economic recession that could be handled - if taken seriously - but the prevalent political preferences didn’t adopt that way. Partisan and sectorial interests drove us to the major crisis and the biggest default in history, with a Congress applauding that measure. They were the same legislators that a few months before had granted Executive Branch widen powers for opposite policies. We passed from a kind of world to another very different. Reforms related to modernization had played a significant role in the recent past and now they have disappeared from the political agenda. The matter is today only addressed as IMF conditions for continuing lending operations on matters as utility legal regulatory frame and bank sector reform. And everybody knows that to many politicians and a significant part of our public opinion IMF is the mother of all our disgraces. Our behavior is just an exogenous variable. During the ’90s Argentina developed an unprecedented, ambitious and deep structural state reform mainly at federal level, framed in what is known as “Washington Consensus”. Its program of macroeconomic stabilization, transfer of services and publicly owned firms, and deregulation, was implemented in a very fast way with the immediate support of both its people and the international community, specially the multilateral lending institutions. During the first years the macroeconomic performance of the plan was impressive. In 1998 the economy suffered a recession. It was motivated by Argentina’s fiscal misconduct and its dependence on external capitals to balance the budget, at a moment when international financial markets were in crisis. Tax measures adopted in 1999 worsened the situation. This scenario drove Argentina in December 2001 to an unparalleled crisis in history. We stay still there and the analysis of the path followed indicates the “cut and paste” of the measures adopted in a very short period, the lack of previous assessments, institutional weaknesses never addressed (lack of effective organizations), a debt-based development addiction that began with the nation, our own social behavior (systematic transgression to basic rules of democracy and society, rule of law), the dearth of a regulatory framework for the privatized enterprises and, last but not least, the peculiarities of policy making processes in Argentina. I am going to focus, in next section, some of these aspects. Of those major reform efforts performed, the first one was the wider and most comprehensive, addressed to reform the State. It was implemented during President Menem administration and took almost four years to be implemented. That state reform
4
was associated to a constellation of public management policies, among them control issues made a significant shift. Then, during the brief President De la Rua administration the reform effort was more focused to very detailed public management policy proposals but it didn’t disdain to expose the roles State must play. The reform should affect the control model introducing the concept of performance and results to be considered. All these attempts greatly differed in its outcomes from the stated rules. Much of the public management measures proposed were common to both attempts, due in part, to the presence of the same high-level technocratic groups involved. The policy making processes, that could be easily described as proper by the so called delegative (O’Donnell) or hybrid (Malloy) democracies (those who have some formal democratic features as electoral processes, coexisting with authoritarian forms of political control, linked to clientelism, bureaucratic patrimonialism and corporatism) were also similar. The idea of civil society intertwining with the State is in these latitudes still vague rhetoric. To these efforts the common features were: o Top-down strategies adopted in an inner circle without any kind of previous debate (but with formal legislative treatment for its approval during President Menem administration) o Reforms made within the frame of negotiations with multilateral lending institutions such as World Bank, IMF, IDB. o Decision making authority in hands of technocrats who strongly influenced the policy agenda o Highly personalized policy processes o Use of legislative powers by the Executive Branch o Lack of strategic planning o Short time allowed to do the reform job2 The present (2 years after default) scenario could be characterized as follows: • While our society is massively declaring its adhesion to democracy versus any other type of government disdains its constituent institutions, while parties and politicians have got a generalized anathema. • Lack of an explicit economic program, instead: contingency measures implementation referred to as “pragmatism”. • A very poor investment environment. • A decrease in unemployment rate to 19.4% after reaching more than 24% • A prudent monetary policy has been maintained as well as the independence of central bank policies3 • Devaluation got a precarious primary surplus on fiscal budget, basically by duties collected on agricultural exports and an exceptional international price for commodities (soy) and a price increasing trend; • 50% of the population is below the poverty line, with recently impoverished middleclass segments. • Fiscal spending is growing slowly, as long the government needs political support for some of its proposals: direct assistance programs, public infrastructure and the recreation of national enterprises are among the main reasons. In the last times some 5
signs of economic desacceleration have appeared; pensions have been increased and a wages rise announce is also in the air. All of this results in an increased expending, despite the primary surplus. • The key structural reforms requested by IMF refer to sustainable public finances with special emphasis on provincial fiscal behavior, tariff increases, restructuring public debt, central bank independence and legal predictability. Following an Argentinean Memorandum4 to IMF authorities, “the main risk to the program is that key elements of fiscal and banking reforms that are crucial to sustainability will only be formulated at a long run.” These main risks detected are the uncertainties about the eventual political consensus for the essential aspects of the reforms needed and the credibility of the debt structuring strategy with private creditors.
6
Section 2: The Reform Issues in Argentina
In this section the experience of Argentina on modernizing its Public Sector and the related public management policy making processes will be introduced, in a limited scope. 1977-1983 Reform issues were present many times and with different strength in the domestic agenda. During the military regime (1976-1983), referred to as “Proceso de Reorganización Nacional” 5, strategies were followed in order to restore balance to public finances6. They tried to bring to public sector some of the ordering and information systems proper of private and military sectors. During this period the idea of privatizing some public enterprises, of the few broken ones that the State took over its custody, was suggested. Public expenditure on personnel fell down from 12% of GDP in 1975 to less than 7% in 1977. Tax collection improved, provincial budgets were adjusted and financial control of state owned enterprises got some success at the beginning. In order to sustain the stabilization, during 1978-81 period, the exchange rate and the public service tariffs were regulated. During period 1981-83 the fiscal unbalance increased, due among other reasons, to military equipment procurement for Malvinas war, a strong fall in the tax collect, inflationary acceleration and tax evasion. 1983-1989 Argentina returns to democracy in 1983. President Alfonsín’s administration devoted all its energy to strengthening of political framework and tried to moderate, to a certain extent, the fiscal unbalance. During 1985 and 1986, an important increase in the tax revenues and in the fiscal incomes in general helped to mend the situation; it was based on high exports duties, special taxes and tariffs advanced in relation to the public enterprises wages. Public expenditure on ordinary outlays was not reduced. In 1987 President Alfonsín’s administration contemplated a heterodox economic adjust plan in order to get some stabilization -Plan Austral- that ended in a fiasco 7 and reinforced the assumption on the structural origins of the crisis. It has to be pointed out the emerging idea of a Third Historical Movement, a populist expression that contributes to erode his political situation. The political reinforcement did not include the institutional building and reform of every democratic transition in order to keep abreast to the times. An idea of constitutional reform was introduced, one to aim a shift from a presidentialist regime to a parliamentarian one besides the strong historical roots the former one has. As O’Donnell8 points, the State was conquered by the party, putting its people in every key place, practicing an extensive clientelism in order to accumulate power with no conception of general interest in mind. In August 1988, it appears the so called Plan Primavera that tempted to control inflation and improve real wages in order to be better positioned to cope with the electoral time. To reinforce that purpose, the elections were advanced letting 8 months between them and the new presidential term. President Alfonsin contemplates privatization of some publicly owned enterprises, such as the national airline (Aerolíneas Argentinas), but
7
faced strong opposition of the Justicialist Party at the Congress. The economical aspects were not properly addressed and several months before the end of his term the country faced social revolts provoked by hyperinflation. It ended in a declaration of the state of siege. Capital flight has intensified, and the national currency was almost dismissed. The persistent inflationary process, the over dimensioned state and its functions, the poor quality of the services delivered, the increased public expenditures and consequent budget deficit, among other conditions, drove politicians and public opinion to realize that the recurrent crisis were due to structural determinants and it was necessary to face deep reforms. In the policy making process associated to this view, the action of strong power groups, such as UIA (Industrial Union) and SRA (Rural Society) had to be recognized. For many years and throughout many press releases and economical studies it had been showed to public opinion the adduced origins of the severe crisis 9. The 1989 debacle drove to a radicalization of the argumentation and state reform became part of the political discourse. Late 1989- 199910 It was time of presidential election and the opposition won the contest. The confidence in the ability of State to perform key functions had extensively diminished. In a turbulent scenario, Government trespassing was anticipated and President Menem took his period five months before the proper date. Prior to his anticipated inauguration he got the outgoing party’s compromise to support the legislative approval of economic instruments to be proposed by his new administration. The electoral campaign’s platform, as all of them, was imprecise about the measures to be sustained but Menem’s administration comes preceded by a “populist” label, not the best label indeed to gain the support of the economic establishment. During the first months of the new administration, the economics recipe applied was similar to the previous ones and the confidence didn’t appear; so, a shift in the economic policy was made. Electoral promises are promptly forgotten in Argentina and “who wins a presidential election is enabled to govern the country as he sees fit”11. The new administration assumed as own the prevailing opinion about the causes of the crisis, the need for a change became widely accepted and state reform was the resulting outcome. To perform such changes President Menem called Dr. Domingo Cavallo as Economy Minister and implemented his plan to fight inflation and introduce fiscal discipline, therefore generating great confidence in the markets. The reform process had followed the formal democratic procedures, including the legislative approval, but the entire process was conducted in a personal decision making style, thus avoiding deliberative mechanisms. The main idea was that economic stability would ensure political stability to the fragile democracy. The public support, after the hyperinflation nightmare, was broad. Technocrats monopolized the policy agenda, while politicians got some kind of reward for their loyalty to the program in exchange relations. Why did technocrats monopolize the agenda? Mostly because the more severe the crisis was, more dependent were the politicians on them in order to get results that enabled the first ones to maintain their situation.
8
In 1989 was declared an emergency status in the Executive Branch 12. This exceptional measure allowed to transform the legal status of all operating administrative units, to create new agencies and to put publicly owned enterprises to partial or complete privatization (after legislative approval) and also to install government appointees in agencies. In own words of the then current Treasury Secretary, Ricardo Gutiérrez13, it is possible to get a clear definition on the reform process: “In Argentina there was not an explicit definition of the new State roles. All Argentineans knew which the unwanted State was. Then, a reform appeared. But if someone asked me if the reform theory was written, I would say no. It was a political movement toward a solution.”... “Who are authentically convinced of the advantages of this model are we, technicians.” In a brief and partial glance, Argentina’s macroeconomic conditions in the pre-reforms scenario featured: • closed economy: protectionism that distorted industrial competitiveness; • economic stagnation; • considerable domestic and external public debt (partially explicited and partially shadowed); • national public debt financed by Central Bank, as long as provincial banks did to provincial states14 ; • public sector annual cash deficits had run of 6-10% of GDP throughout the 80’s; • strong state intervention on markets and subsequent income transfers among sectors; • minimum investment levels; • state owned enterprises with old fashioned and non productive structures, losing large quantities of money and providing very poor public services, with a weakened management and privileged working conditions for over dimensioned personnel structures. The macro social conditions’ scenario, also in a brief and partial glance, included: • a politically skeptical population, while it was trying to rebuild the concept of democracy 15; • political institutions adversely affected after years of extreme inflation, broken rules and inefficient administrations; • a popular feeling about the lack of managerial control in the different levels of government and the belief that transparency in the government activities is just for other countries; • low credibility on government as a solution provider, and the subsequent loss of governance plus a very poor opinion about public officials; • growing social expectations; • a bureaucracy affected by very frequent political changes (that does not necessarily mean a ruling party’s change, but an internal faction change inside the governing party) ; • citizens demanding better service quality and drawing attention to their customers’ rights; • wide consensus about the urge of a deep reform in the State, without precision about its features. 9
During Menem Administration reforms were made in two differentiated phases, the first one mainly addressed to reform the State and the later to reinforce that process enhancing public management. In order to accomplish its task, the Government implemented the so-called “State Reform I” (1989)16 and late the “State Reform II” (1996)17. The first stage was oriented toward a redefinition of the State role, mainly at federal level. The reform comprised key functions to be performed, state owned enterprises privatization, a proposed fiscal and monetary discipline, changes in public management and the introduction of new technologies. The second one was mainly addressed to public management issues. State Reform I Under this label a comprehensive program that included fiscal, monetary and structural reforms was implemented. The main tools were: • convertibility (a sort of Currency Board), cornerstone of the stabilization process, that fixed the parity one peso equal one American dollar, • elimination of fiscal and quasi fiscal deficits, • selling of the state owned enterprises, • a new Financial Management Law, • deregulation and market liberalization • an administrative emergency was declared and governmental apparatus gone into radical revision. . This constellation of changes was implemented in a relatively short period of time, in a very fast and decided way alleging the critical situation. Policies were adopted following contemporaneous events in other countries and based in a very strong political leadership, with the technical support of well-formed elite. The respective policy making process (one which avoided transparency and former deep discussion of the measures to be implemented) affected to some extent public perception on the legitimacy of the reforms. An arising question in some sectors of society was if government did manage in order to social interest or private ones and for many people the privatization process was inseparable from corruption related to state practices. In just four years the national oil company, the railways, electric energy, telecommunications, airline, TV and radio stations, petrochemicals, steels and ship-yards were sold. The call to auction characteristics favored the presence of few offeror groups and in many cases the process was subject to irregularities. The systems of checks and balances were weakened: the Supreme Court of Justice was modified in its member’s number and the possible debates in the domestic political arena were impaired by the agreement made between the two major political parties prior to the advanced assumption. In order to reinforce the measures adopted within the State Reform Act frame, a new Decree was issued in November 1990, addressing public management issues. It intended to attack the operative inefficiencies, which were affecting the administrative organization and the quality of services. The situation was characterized as “reaching dangerous limits”. The measures were oriented to obtain a substantial enhancement in administrative efficiency and rationality, decision capacity and to restructure the administrative body. The idea of less complicated administrative procedures and smaller
10
organizational units was dominant. Such as were the ideas of technological modernization and improvement of public attention. All the administrative structures had to be derogated and the new ones had to be submitted to an Executive Control Committee for the Administrative Reform (CECRA). A new Civil Service regime project should be presented by the Public Function Secretariat to the Executive Committee’s consideration. Said project should feature a modern and professional Civil Service, one that brings prestigious status to agents labor, introduces new managerial technologies and privileges training, merit, competitiveness and productivity as foundations of a Civil Service career. “The idea of a professional Civil Service was materialized through the approval in 1991 of the National System of Administrative Profession - SINAPA, following the name in Spanish: Sistema Nacional de la Profesión Administrativa. The system was supported by principles of merit, training, unbiased selection and productivity systems as foundations for recruitment and progress in the public servant career. The tool had been considered as guaranty of immediate administrative restoration of accountability at all levels. The system failed in its implementation due to the lack of a previous personnel assessment and to the absence of a professional guidance in the process. The mismanagement of the change from the old system to SINAPA caused many inequities and organizational discomfort. It relied almost entirely on political premises.”18 Meanwhile, it has been a dramatic turnaround in the economic and social scenario. The economic program was succeeding and social optimism was growing. Such conditions brought Government great confidence about certain possibilities for its reelection. The idea of a Constitutional reform regains forces (it was once favored during President. Alfonsín administration). The reform was conducted by strong political leaders (Menem and Alfonsín) who prefer, as usual, weak institutions. The main objective, from the point of view of President Menem and his party, was aimed at the presidential reelection and the softening of conditions to go to ballotage. In 1994, a 70% of the original Constitution was modified, during three months of work. The reform has as an explicit objective to attenuate the strong presidencialism throughout a new figure (the Cabinet Chief); instead it gives constitutional status to the legislative powers of the Executive Branch (the so called emergency decrees). A bicameral Committee is in charge of controlling the government’s use of emergency decrees. It was ordered in the constitutional reform but never carried out. The real fact is that Congress play since long time ago a passive role. Many legislative functions were delegated by it: those related to tax revenues, national universities, public services, customs, and electoral system. Other features of the new Constitution were semi direct democracy mechanisms, customers and environmental rights, transparency for the political parties functioning, regulatory frame for public services and regulatory agencies. It shows what was called “constitutional snobbism”19, introducing juridical novelties from over the world. President Menem was reelected in 1995. Among his campaign promises was the reforms’ deepening and it meant reinforcing public management issues because major surgery was performed and the state has changed its role to a great extent. The country had faced a severe financial situation due to the consequences of Mexico crisis but could respond successfully to outside events. Fiscal control was difficult, due to the federal
11
system of government20 combined with the reluctance of provincial states to curb their expenditure growth and their poor revenue performance. In 1996 Dr. Cavallo was not anymore Economy Minister, but the main features of the former plan were still in place.
State Reform II
Under this label another public management reform was introduced to cope with the needs of the new State and to assure the state reform recently performed. In February 1996, Act 24629 was enacted. Its purpose was to develop a management model for central administration and decentralized entities, and to transform the respective regulatory frame in order to get a total state reengineering, orienting allocation of resources and results toward citizen service. This process would be held through modifications, mergers or consolidations, transference of agencies to provincial governments, partial or complete abolition of objectives, competencies, functions and overlapped or unnecessary duties, and privatization. The Executive Branch implemented a special fund21 in order to give to those civil servants whose positions were suppressed (due to the measures adopted under this Act mandate), training and technical assistance for self-employment programs and other kind of community associative organizations. It was financed out of public assets sales or public indebtedness and was the managed by the Labor Ministry. During this implementation no effort was made to retain valuable human capital, and said valuable human capital, that have opportunities in the labor market, made no effort at all to stay in the civil service. Many of them just wanted the compensation in order to develop personal projects. A further analysis shows that the financial effort made was not followed by the definitive suppression of all positions held vacant due this measure, as it was stated. Since at the moment neither the mechanism rejects determined positions or qualifications, nor establishes the necessary conditions to monitor the program or any kind of assessment of the measures, it was designed as a legal procedure to obtain money from the State. It was a bogus mechanism: it didn’t block the chance of reentering under other contractual regimes and it served as the revolving door for many people who do have the contacts and may be the skills. Among another factors, it is widely accepted that one of the reasons that conspired against the effectiveness of the reform measures was the decision of President Menem of running for a third consecutive term in 1999 forcing a Constitutional reinterpretation. The momentum was not the same for reforms: some problems were emerging22 and credibility on government was attenuated. The economical cost of the measures taken and the fiscal consequences of the informal pro-reelection campaign (public funds allocated among provincial Governors according to political needs) have had strong influence in the following events. The differences between Mr. Menem and other members of his Party were eroding the situation and this entire drove us very far from the institutional quality required in order to get sustainable reforms. The Justicialist Party lost the elections. 1999-2001
12
In 1999 Dr. Fernando De la Rua followed Dr. Menem in the Presidency; he represented a political coalition that made of ethic and fight to corruption its motto. During President De la Rua administration the reform issue in order to modernize State became a very important one, in theory at least. The change was heading to a second generation of reforms: state promoting social and economic development, responsible for the less favored sectors, based on ethic and transparency. It was accepted that previous reform attempts had failed due to the generalist practice adopted. So, this time concrete and specific actions will be imposed aimed mainly at enhancing operational aspects of public management. The reform design was targeted to modernize federal government but the conceptual corpus could fit provincial and local governments too. The proposed reform contemplated the predominant tendencies on public management policies. It was ambitious and precisely defined, but emerging questions arouse: with which people and in which society this process could be successfully performed. Previous voluntary separation regimes produced a sort of severe human decapitalization, and the last separation was accepted as a mistake by President De la Rua (responsible for the measure) in his inauguration address to 2001 CLAD conference23. The Vice-president Alvarez (from a different party than Dr. De la Rua) was in charge of the State Modernization process. A Secretariat and a Commission were created for that purpose; the members of the Commission were four State Secretaries, the Síndico General de la Nación24, and the Deputy Secretary of Gestión Pública (Public Management). The Secretariat was conceived as technical support to the Vice-president. According to words of the current Secretary in charge (Marcos Makón) “State Modernization was created under a wider vision than traditional administrative reform concept or public management reform”25. The three pillars of the reform were: modernization of public management, political reform and knowledge and society. The political reform idea was looking for transparency in the political relations, the political parties’ role and their strengthening, a transparent financial support for the parties’ management, and transparency also in electoral processes and candidate’s selection to public duties. “Knowledge and society” implied to formulate a new role for State in a globalized world and get how Argentina could enter in the knowledge society. Fiscal balance was considered as a main issue in this reform, and visualized as a basic but not sufficient need if the existing structural rigidities were not removed. State was defined as costly and inefficient. A core issue for this reform did not involve the amount of the public expenditures, but the quality of the services provided. At that time, public expenditures were 30% of the GDP; not too much considering USA and EU rates. But here the problem laid on tax revenues. The widespread opinion about the high public expenditure was explained as related to the burden tax’s inequities on population and to the fact that the middle class segment paid taxes and also had to buy services from private providers that could be publicly provided (education, health, and security). The public expenditure redefinition connoted the change in the way public management performs its duties. This process also put on discussion, once again and very limited in time and actors, the kind of State Argentina wants: its key functions26. The main features of the proposed reform were: a friendly and committed with the citizens State; a high quality, efficient and effective services provider State; a social and economic development promoter State
13
that takes care of the less protected sectors of the society and was financed by a wide based and equitable tax system. It was also appraised that social expenditure must not represent a heavy burden for society and that transparency was a goal. The axes articulating the plan were: 1. a results oriented management; 2. a rational imputation of functions eliminating overlapping, 3. an strengthening of basic policies on justice, health, education, social security, social promotion, employment, security, defense and science and technical promotion; 4. regulatory capabilities 5. tax administration and 6. enhancement of civil society participation. This public management reform took as major transversal change the human capital management in a competencies based frame. All what was stated represented the last and best in market. But how reasonable was to adopt such radical changes without previous assessments about the resources to be applied to the process? Another transversal change was the procurement system. State was characterized as an inefficient purchaser, due to outdated (1956) rules and regulations, technology and criteria. Those rules let aside wide possibilities, brought by communications, science and technology developments. The goal was to obtain efficient and effective procurement practices that could be controlled by civil society. Previous efforts made on the Financial Management System during the Menem administration were praised as essential. The systems underwent a comprehensive revision due to their non-integrated, autonomous and anarchic operatives. But important duties were pending on this matter: the development of automatic registration of human and physical resources procurement in the accounting registers, in order to get financial information that accurately reflects transactions. A reengineering process was proposed as a solution in order to implement an unique financial management system for the entire Central administration. The reform would also include transparency and anti-corruption policies. Corruption was declared as central question on public agenda; it was perceived not only as a moral issue, but also as a public management one. This was one that affects economic, institutional and social development. The problem would be addressed through ruling quality, public access to information and civil society participation. Once again, government failed to impose fiscal discipline: public expenditure was growing and in order to finance current expenditures outlays more public debt was issued. The goal of a balanced budget was not obtained through the use of genuine financial resources. The whole situation worsened and reforms remained in paper. Vice-president Alvarez resigned on October, 2000 amidst his accusation of improper payments to Congressmen in order to get from Legislative the enacting of an IMF requirement on labor market conditions. In January 2001 IMF supported Argentina with a large package, the so-called “blindaje”. The Economy Minister Machinea resigned and President De la Rua called Dr. López Murphy to office to replace him. He lasted 10 days
14
in office, after declaring the need of a deep structural reform and mentioning the personnel surplus. In order to give the markets good signs and to multilateral lending institutions a well known name, President De la Rua called Dr. Cavallo for a second time to office as Economy Ministry. This time, the markets didn’t answer to Dr. Cavallo’s appeal and the severe financial situation deteriorated day to day. In July 200127 a Presidential Order, stated the acceleration of the “comprehensive state reform” in order to reinforce the “zero deficit” principle. Section 2 of this Presidential Order call for an accentuate profesionalization of civil service, giving participation to unions in the reform issues, fight against tax evasion, limited the wages (the top was the Ministry remuneration), etc. But the situation deteriorated daily and the proposed measures had no impact at all. The banks suffered runs on deposits and restrictions on the use of cash were imposed. Bank system was almost collapsed, government ended up using the reserves of the entire system. December 2001 Dr. De la Rua left the power among popular riots.
2002-2004 A sequence of wrong economic measures transformed a recession into a depression. The story follows with many presidents in a very few days, the public debt repudiated in the biggest default of history, bank deposits frozen, property rights undermined, the peso Convertibilidad annulled and all these extreme measures were approved by the same legislators that granted full powers to Executive Branch, just a few months before. Also has to be punctuated the condemnation of the measures adopted during the ’90 as the mother of all the problems and the Manichaean discussion on state reform. Recently the IMF28 stated “... the fundamental causes of the crisis, it is our judgment that it was essentially a combination of the failure of Argentinean policy makers throughout the 1990s-and during the crisis period of 2000-2001-to take the necessary corrective action to make sure that domestic policies were compatible with the choice of the exchange rate regime. ..., but the fundamental problem of policy making was the inconsistency between fiscal policy, particularly the size of the public debt and the fact that most of it was borrowed externally; the incompatibility between that and the choice of exchange rate regime-the hard peg, convertibility regime that essentially constrained other macroeconomic management choices.” At the present time, there are some clear indications of the government's willingness to play a more active role in the economy reassuming functions let aside, after the state's withdrawal in the 90s. The official discourse talks about “breaking the neoliberal chain of the 90’s and not to return to state monopoly”29: a middle point between the free-market reforms and the state interventionism. Following that idea, at this moment it is discussed at Congress the creation of an new state-owned energy enterprise which will play a regulation role in that market, avoiding oligopolistic practices. This company will explore and develop oil fields, as well as transport, storage, distribution and commercialization of those products. It is interesting to point out that the legal format proposed by Executive Branch is closer to private sphere and that Congress rejected that format alleging control failures. ENARSA was designed as private stock company of mixed
15
capitals: will be 53% on hands of federal State, 12% will be controlled by provincial governments and 35% will be listed on Stock Exchange. Some of the privatized enterprises are returning to the state ownership and/or management: as the Post Office (Correo Argentino) whose concession has been rescinded due to “unsatisfactory inversion records” and some railways sections. Also State has taken care of airlines companies in crisis and a new airline was created (LAFSA), which will be privatized next December, accordingly, to press releases. The renegotiation of utility contracts, whose discussions are supposed to be completed by the end of the year, is still a pendent matter. At this moment, September 2004, the public management modernization issue doesn’t appear neither in the official agenda or the presidential discourse. Despite that absence, during the term of Dr. Beliz as Justice Minister, many administrative reform initiatives were introduced. His recent resignation and the controversial public statements made about the reforms by his successor, avoid assessing their continuity.
16
Section 3. - Control Issues 30
To be accountable for collecting and spending citizen’s money is an ancient concept so old as democracy itself. The subsequent control of activities afforded with that money too. Since 1870 the control within the Central Administration was in charge of Contaduría General de la Nación, and in 1956 the Tribunal de Cuentas (Court of Accounts) headed it. On April 1991 the Executive Branch sent to the Congress a bill in order to reorganize the financial administration and the management control within the Public Sector. The aim was to support the process of State modernization and subsequent public management reforms initiated in late 1989. Until that moment the control within the public sector had been undertaken by the Tribunal de Cuentas de la Nación for the Public Administration and by Sindicatura General de Empresas Públicas for the state owned enterprises. A previous control within the Public Administration was exercised by Contaduría General de la Nación (National General Accounting Office) and also by Tribunal de Cuentas de la Nacion delegates, accredited in every entity. This meant in practice previous control undertaken by an external Body. As part of the reform process, the Act 2415631 was passed in 1992 and it was named as Financial Administration and Control Systems in the Public Sector. It establishes a control model for the Executive Branch (Central Administration and decentralized organizations), and government agencies that have not been privatized. It is supported by an internal control system and an external one. The internal one is ruled by the Sindicatura General de la Nación (SIGEN), the General Controller’s Office, and is integrated also by the Internal Audit Units (142 at this time). The conceptual frame first appeared in the Integrated Model for Financial Management System, Control and Audit for Latin America (SIMAFAL in Spanish), presented by the International Development Agency in April 1991. The Act has established an integrated and integral control model based in the 3Es: economy, efficiency and effectiveness. The model was sustained on two pillars: legislative external control and internal control conceived in a very modern way. This law apprehends the evolution that the concept of control has suffered, from a formal, legal and financial approach to a management process focus. One peculiarity of the enacting is that the law links Financial Management and Control. In the considerations of the message presented to the Congress32, it was stated: • The project rules in order to bring rationalization to the Public Sector’s financial administration and to build a structure of internal and external control over the financial and operative management of public organizations. • It shall motivate a great advance in the improvement of the republican system of governance and in the reinforcement of democratic practices in the country. • It shall also be a new barrier for the diverse forms of corruption, which had proliferated in Argentine society, favored by the 1989 economic crisis that also affected the public sector. • It shall facilitate a great transparency in the mechanisms for controlling the procurement and the allocation of public resources following the objectives and policies defined.
17
• The practice of a “previous control” carried out by external institutions was defined as inconsistent with modern financial administration schemes in public sector. “Previous control” included in the internal control structure, becomes one of the toplevel duties in each one of the state entities. • Sindicatura General de la Nación has to be the President’s Auditor, conducting and ruling the internal control performed throughout a net of Internal Audit Units. • The existence of a Supreme Control Body, under technical and financial Congress dependence, becomes necessary. Its mission is the ex-post control about the State’s resources employment, the economic and effective assessment of public sector activities and their achievements. These are the main features of the Sindicatura General de la Nación (SIGEN): 1. SIGEN is an entity with administrative and financial autarchy, which directly reports to the President. 2. The Síndico General de la Nación (General Comptroller) and three Deputy Síndico General, all of them political appointees, head it. 3. It is defined as a normative, supervisory and coordinating Body. 4. The Higher Official in every jurisdiction or entity will be responsible for the sustenance of an adequate internal control system. 5. Among SIGEN functions the following ones can be mentioned: • To issue and apply the internal control rules. • To issue and supervise the enforcement of the internal audit rules • To guide the program, project and operational assessment. • To report to the President the facts that may cause severe damage to the national wealth. Each Internal Audit Unit reports to the highest authority of its jurisdiction and it acts under the technical coordination and supervision of SIGEN. The responsible for the maintenance of an adequate internal control system is the above-mentioned highest authority. The internal control model applied must be integral and integrated, with regard to budget, economical, financial, assets, normative and management issues, plus program, project and operational evaluation. This system implies that ex-ante and expost controls tools have to be integrated in the organization’s and internal audit’s planning, rules and procedural handbooks. It must be pointed that the new instrument had left a gap on functionaries’ responsibility (a sort of accountability). One of the problems faced is that the Internal Auditor does not always interact at the level required to make his/her opinions heard in the decision locus neither is recognized as a reliable advisor by the political authorities. The system shows itself as of limited aptitude in order to follow policies33. During the first years after the enacting officers were devoted to, among other goals, to develop its General Internal Control Rules34 and to ground the basis of internal control in the field. During 1998, almost five years after the law was enacted, the General Rules deeply rooted in the principles stated by the Internal Control Integrated Framework (COSO)35 were published. Control is concerned with means as well as ends. The control model adopted was pursuing explicitly36:
18
• “To improve within the public sector a control environment as an expression of a cultural change based on accountability, ethics and transparency.” • “To evaluate if performance was done according the 3Es principles, within a legal context...” • “A value added performance, better timing in the decisions and timely corrective actions...” • “To generate a useful, complete, trustful and timely information system to be of assistance for the President”. Until the Act 24156 was promulgated, control performed by the Tribunal de Cuentas could be characterized as a formal compliance with law and governmental accounting standards. This law proposed a shift around in which the organization’s history and culture have an important role to play. But, the point is if a change is possible when the entire system is in the middle of a radical revision and mainly when it is culture what has to be modified. As long as Control Environment depends strongly on the factors that compose it, it will be as good, fair or poor as they are. Predominating organizational culture determines what actually happens, and which rules will be followed, bent or ignored. In all these years no special measures have been taken to address these cultural aspects. Other control environment factors to take into consideration are: management’s philosophy and operating style and the way management assigns authority and responsibility, and how it organizes and develops its personnel. In the proposed model everyone in the organization has responsibility for internal control and must be prepared to face it. But when the entire system is under downsizing and no specific human capital policies are been implemented, the adoption of such kind of measures seems hardly ever possible. The effectiveness of internal control must be undoubtedly associated to integrity, commitment to ethical values, and competence of the people who perform it. Conspiring against these preconditions were (still are) a society where the rule of law is not a highappreciated value, a system where competence and merit are not preferences for career, instead nepotism and clienteles are. Within an administration that has as its historical behavior doing just what is ruled as much as avoiding new paths, the superior officials were asked to play the role of managers (focusing on achieving ends) and administrators (focusing on the means being used) of public services oriented to the users. Once again the main question arises: if the State was in suitable conditions to carry out the transition, regarding its human capital and administrative values. As in many other Argentina’s bodies the frequent change of authorities and the consequent changed profile to perform the duties had an impact in the organizational performance. In ten years there have been 8 Síndicos Generales (one just nominated but then no confirmed), the first four graduates from the Economic Sciences, the following three were lawyers and the last one also in economics. Is this relevant? We will see. The changing profile has meant a change in the control approach under the same legal instrument, as long as the model didn’t have time enough to be consolidated and the long standing tradition of giving a personal touch to the public function. During the first six years, the control activities really performed were towards financial and legal
19
compliance, limiting in some way the control performed to compliance audits, but the operational audit was mentioned very often. The difficulties for rooting the model are associated with the deep changes involved not appropriately addressed and the lack of interest authorities showed on internal control matters.
The actors 1984-1999 SIGEN is the legal continuity of the Sindicatura General de Empresas Públicas (SIGEP): the former external and concomitance legal, financial and managerial control of publicly owned enterprises. The first Síndico General (Alberto Abad) headed before the SIGEP and was an active player during the legislative treatment of the Act 24156. SIGEP’s people constituted mainly SIGEN’s staff; they were specialized in external control in an administrative environment ruled by laws of private sector application, and organized more as private enterprise than as central administration. All these aspects made out the necessity to be trained in the new vision and be familiarized with Central Administration management. The first times of the new entity were dedicated to examine the “business” of the areas under control and the control performed was based on financial and legal compliance. The training on the new model was basically in charge of the Canadian Comprehensive Audit Foundation (1993-1994) when an ambitious program was implemented. But three E audit was not so easy to root, also the idea of internal control as advise and so, mainly the audits performed were dedicated to compliance (financial and legal). Mr. Abad’s contribution to define the model implementation was decisive but he resigned to take other responsibilities within the Executive just two years after the enacting. His successor (Héctor Agustini) was at that time one of three Deputy Sindicos, and his previous position as member of the Tribunal de Cuentas is not a minor detail. The control orientation toward compliance was maintained and the internal control concept was under analysis once again. During his term the Internal Rules were approved and after two years he resigned. The Internal Rules took five years to be approved and the change of the Síndico General delayed its diffusion and factual application thereof. Following the reformed Constitution (1994) and the state Reform II, SIGEN defined its role in 1997as37: • promoting organizative structures adapted to institutional needs, with a defined command chain, an effective function separation with primary allocation of responsibilities due to clearly established actions; • implementing an administrative responsibility regime for the officials, including both management and results (so is accepting the absence of one); • enhancing the control environment on jurisdictions; • reporting and advising the Executive; • detecting problems and proposing its solutions; • tending to excellence in public management and control; • being a technological and doctrinaire referent on internal control matters in Argentina and Latin America.
20
The tools chosen to promote changes in order to achieve the 3Es plus transparency in Public Sector were: integral and special audits, technical assistance to Internal Audit Units and technical diagnosis of the Executive entities. The diffusion of the internal control concept among the managerial performers was never undertaken. So, the internal control became more related to Administrative Directors (and administrative procedures) than to high level authorities (and policy implementation) , limiting its scope and impact. The third Síndico General (Cristina Benzi) came from a Legislative Bicameral Committee dedicated to the Accounts Revision. She was a year on charge, until the new administration arrived and during her term no main changes were adopted. 2000 - 2002 During President De la Rua administration, the professional profile required to be Síndico General was widened from exclusive professionals on Economic Sciences to lawyers among those eligible but maintaining an experience’s requisite in administrative management and audit of 8 years, and the modification was presented in a section of the Ministry Act38. The designated lawyer (Rafael Bielsa) didn’t meet with the experience in Financial Management and Audit required by law. During his period SIGEN experienced important changes in its internal organization and it was approved the first strategic plan. A vast personnel movement was implemented and it implied everybody coping with new matters to manage. The main features of the strategic plan were strengthening high direction systems (integrated by something named Techno-political Processing System, Strategic Planning, Accountability and Managerial Operative Programming and Control System). The Plan established a SIGEN’s certification, and it was defined as the set of rules that established evaluation criteria for the internal control system. The intended aim was the improvement of processes associated with the Program Agreements set forth in the Act 25152 and with external financial aid. Another distinctive attributes of the Plan were the idea of passing a rule in order to punish those who didn’t provide complete and timely information, the establishment of Accountability procedures, and the institution of an Integral Internal Control System for the entire Administration. None of these measures was implemented; none of them passed the ideal level due (among other reasons) to the abbreviated administration of President De la Rua. During this period it became a fashion to endorse SIGEN the compliance verification of administrative orders such as entrance time, use of cell phones and official cars, etc. The Action Plan 2001 included a large number of the so denominated performance and results audits; a real curiosity given the fact that no performance or results management was performed. During this period it was approved the voluntary separation of 50 % of the top managerial staff. Those positions were fulfilled mainly by professionals who didn’t meet the suitable requirements and depend of political or personal support to maintain wide wage differentials. The way adopted by Mr. Bielsa to manage the human capital, beyond the approved rules and regulations, could be considered as a serious threat to the auditors’ independence. A significant change followed to this experience. In January 2002 it was designed as Síndico General de la Nación a well known administrative jurist: Rodolfo Comadira. His idea of control was absolutely biased to legal aspects, neglecting the managerial ones. A
21
study on the Title VI of the 24156 Act was published by SIGEN in April 200339 and some of his thoughts on these matters are stated there. They illustrate fairly good how constrained they were. In the page 58 one unidentified commentator says:“... only the strict rules observance can drive to ensure that management is based on economic, efficiency and effectiveness criteria in the attainment and allocation of public resources.” In page 67: “... Never an adequate management can be, pursuing efficiency and efficacy, in the wrong way with legal acceptance. The equation is inverse: only the strict normative observance can drive to ensure that management is based in economic, efficiency and efficacy criteria...” Despite all advocacy to legal aspects, during Mr. Comadira period, the prior violations to normative aspects in human capital management were sustained. After the distinguished administrative jurist another two Síndico General were appointed, none of them met the experience required by law. The first one performed his duties for a 13 months period on office and the second just one month. No major modifications were impressed to the control orientation. For the time being, no Síndico General de la Nación is in charge and the model performed, definitively oriented towards compliance, is still maintained.
22
Section 4- Conclusions
The reform issues have been present for 17 years in the national agenda, the strength and the approaches used to provoke changes have been variable. The most remarkable outcomes belong to President Menem period, because a deep state reform was performed and public management was redefined to keep the pace to that reform. But the attempt made during President De la Rua deserves a special consideration as an authentic paradox: his project was formally perfect and his administration was a paradigm of ineffectiveness, administrative weaknesses and indecision. Why such a divorce between normative and facts? Politics explain just a part of it, the rest remains in the personal standpoint. Was the state reform in Argentina successful? Yes and not. The answer depends on the perspective adopted for evaluation. It was very ambitious and outcomes were not all achieved. State has definitively changed, but the controversial way in which it was managed ensured the current discussions about their costs and effectiveness. The work done to put it on regime was radical and might be well intentioned, but autocracy and precipitation conspired against both its public image and outcomes. The maintenance of policies throughout different administrations is not common: public policies are unpredictable and unstable, they mainly respond to opportunity. The practice is to change everything the predecessor has made: our times are always foundation ones. It also has to be admitted that as long as the changes are made following paradigms, ignoring criticisms and in a very fast way, there is no room to make corrections in the direction adopted. Another real problem is that State has not the capacity to enforce its legislated policies and this fact conspires against its credibility and success. One thing is what is written (acts, decrees, rules) and a very different one what is performed. In order to characterize the reforms, these are some conclusions. • Society accompanied the state reform process and the idea of success was present. Political and economic stability were strongly appreciated outcomes. A certain kind of governance was assured, despite all the mess, and it was proved in January 2002. • The policy choices adopted, more reliant on market forces, respond to political needs and fiscal reality, and the lack of different ideas to overcome the severe crisis. They followed the world successful tendencies, framed in the Washington Consensus. • Privatization was inevitable. Publicly owned enterprises will no longer survive without important capital injections and managerial updates. A broken State was not in conditions to offer the services needed. • A regulatory frame was established by the 1994 Constitutional reform. • The favorable conditions that the state reform produced drove to an undeniable fast country’s modernization and also to unbalanced social growth. • Among the most criticized features are those associated with lack of transparency and corruption suspicions over the privatization process. Other strong criticisms are addressed to the lack of social support to those affected by the reform process. • Political interest drove many of the stages of the process and technocrats “negotiate” political support with a blind eye on administrative mismanagement performed by political and high administrative levels.
23
• The reform episodes began with a strong political need and the outcomes attained depended strongly on the implementation process, due to the divorce between facts and proposed rules. • Structural weaknesses were never confronted. • The public management policies adopted comprised expenditure planning process and financial management, civil service and labor relations, procurement, organization and methods and audit and evaluation. • It is a “before and after” time in Financial Management aspects: Central Administration will not be the same due to technological changes and the systems implemented, and also due to the important human capital loss. • The expenditure planning process, despite formal aspects, is still far from being a real allocation of resources and results. • Procurement processes were enhanced at the beginning, but late modifications intended to emphasize transparency and control contributed only to their bureaucratization. • Audit issues were addressed in a modern way, but they are far from being what is needed to improve performance and getting results. Evaluation is still a pendent matter. • Regulatory authorities constituted new organizations that follow many administrative aspects of private sector, such as the labor relations regime. They were conducted in many cases by the same persons who had run the privatization process; mainly no regulation was really performed. Public administration is characterized in Ricardo Gutiérrez40 own words as deficient in its capacity to design public policies and to manage effectively and efficiently. Among the principal critical points he pointed the following may be mentioned: • lack of definition at national, estate and local responsibilities levels on social issues and services; • institutional weakness in policy-making areas; • lack of coordination, at ministerial level, of similar activities; • poor efficiency in public management, specially in social programs and those dedicated to improve work generation; • lack of political will and appropriate mechanisms to adopt programming and management control; • persistence of bureaucratic behaviors that provoke inefficiencies and facilitate corruption; • administrative structures and budget programs that duplicate or overlap functions; • unmotivated and bureaucratized personnel; • poor IT development; • lack of transparency in procurement processes. Years later, facing unwanted results (unemployment, industrial weaknesses, very heavy public debt in default) mainly derived from the inadequate fiscal management among other political conditions, the state reform is severely questioned by many sectors of society, that had earlier enthusiastically supported. The privatized services that provide improved basic services are today questioned both about its price as its quality. Many
24
ideological interest are going around these issues but the real fact is that trust between government and citizens is almost extinguished. Then, what had failed? There are many factors to mention. The processes that create policies are central at the time of explaining the failure. Spiller and Tommasi in an exhaustive analysis 41 on the topic argue that “the characteristics of public policies in Argentina are the outcome of a non-cooperative behavior in the policy making game” as “product of institutional instability and institutional rules that negatively affect the expectations and horizons of the actors involved in the policy process”.... “All of this leaves an under-institutionalized national policy making arena populated by transient political actors who tend to behave myopically, and who do not build long term policy agreements”. From a more restricted, operational and biased own point of view, another factors have to be pointed out. A cultural one: the superficiality with which reforms (as other policies) were faced: for many people a mere statement seems to be enough to get results and managerial aspects are usually subordinated to partisan conditions. State reform was adopted as a political tool to let aside political and economic instability, but once the risk disappeared things try to return to the well known paths. A cultural and managerial aspect should be mentioned: improvisation as strategic approach. To the emergency issues common to the crisis that provokes the reform, a national style of behavior (or misconduct) based on improvisation rather than rational programming leads the processes. Among the managerial aspects: people are a key aspect to be considered in any social process. If you treat human resources just like numbers and forget to take into account their experience, skills, profiles, motivation, management, values, no success is possible. It is people who made the difference and its professional management was an absent issue (despite what has been instructed). The withdrawal of State was made in an unorganized and precipitated way. Maybe it was our only possible way. The reform process results in a weaker, a little smaller but not less expensive State and impoverished in its human capital and values. Many of the functions to be performed as those related to regulatory aspects were mismanaged. For those belonging to the political arena involved in the policy making process the idea of a stronger, powerful State is commonly associated with a bigger one, not with one more efficient and effective. These two words are associated to the 90’s (a bad word at this moment). It must also be pointed out the ignorance of political authorities and its teams on the matters they have to rule, their subordination to particular or partisan interests and their lack of commitment with effectiveness. What happens with institutional control? Enacting of the Fiscal Responsibility Act costs to Central Government $A 108 millions given as debt forgiveness to provinces reluctant to sign. Congress is now discussing the approval of full powers (called “super powers” by the press) to Cabinet Chief to manage the entire allocation of 2005 Public Budget. The present administration had issued the largest amount of emergency decrees in history, and they have a favorable Congress. The strong presidencialism is endemic
25
and all Presidents play this game. Control was not, is not and will be not an issue of real interest. It is a forgotten matter, strange to our social and political habits. Internal control matters followed the changes produced in political authorities in charge of it and the human capital management policies applied didn’t contribute to its enhancing. As long as bureaucracy is so firmly tighten to continuous political changes, the probabilities to strength the conceptual frame and its applications are remote. The role of internal control was never firmly rooted as Act 24156 states and it becomes a hollow voice. There was not a firm strategy to its enforcement: in the first times it was due to the necessity of adapting to new context and then, to the forever changing political scenario. Technical and organizational aspects are subordinated to political ones: a Body that has to be essentially a technical and independent reference adapts itself to what is supposedly a political point of view. The main reforms to be faced in order to accomplish the goal of a modern and effective State, serving its citizens, must be addressed to: • strengthening of institutions; • strengthening the policy making, programming and control capabilities; • strengthening the civil society role; • increasing transparency in government operations; • enhancing public accountability; • modernizing public management practices, with special emphasis on human resources, procurement and control enhancement; • improving the quality of public expenditure; • redesigning the Executive Branch organizational structure, rationalizing it to functions to be really and full performed. In Argentina major state reforms were legislated and to a great extent performed. They haven’t brought all the renovation and benefits foreseen but in a contra factual exercise, it is an unpleasant idea to think of Argentina without those reforms. They were desperately necessary and many advances were made. Public management conditions didn’t give full support to the process. The reasons of failures are deeply rooted in us. We were for many years under the umbrella of a welfare state. Change always generates resistance and nostalgia. This is worsened when a severe crisis is present and those who need assistance just found attributive blames. The reform momentum seems missed but it will always be room for a magical appeal: we are responsive to them. How long and proper the reforms will continue is an aspect this paper is not able to appraise.
1
García, M. E.1999a. “The Recent Experience on the Search of the New Public Administration in
Argentina”- IIAS Conference, Sunningdale, UK and García, M. E. 1999b “Trying to Root a New Model of Internal Control in Argentina: The Role of a Training and Professional Developing Center”- International Association of Schools and Institutes of Administration- Birmingham, UK. 2
In De la Rua administration just 120 days.
26
3
At this time (September 2004) that condition is putting in doubt after replacing President and Directors
by professionals with no experience in the monetary field 4
September 2003
5
National Reorganization Process
6
Heymann, D. and Navajas F. 1989 - “Conflicto distributivo y déficit fiscal. Notas sobre la experiencia
argentina, 1970-1987”. Desarrollo Económico, 115:309-329 7
In 1989 the Consumer Prices Index variation was 4.923.3%
8
O’Donnell, G. 1989 - Argentina, de nuevo - Working Paper #152, Kellogg Institute
9
Beltrán, G.- “ Justificación e inicio del proceso de reformas estructurales de los años 90”- Epoca, Revista
Argentina de Economía Política. Año 1, Diciembre 1999. Available at http://www.epoca.step.net.ar/ 10
García, M. E. 2001- “Unmasking Facts: Modernization, New Contractual Responses and Human
Capital in the Argentine Public Sector” - IIAS Conference, Athens 11
O’Donnell, G. - Delegative democracies? - WP# 172, Kellogg Institute Available at
www.nd.edu/~kellogg/WPS/172.pdf 12
State Reform Act (Law 23696)
13
“Reflexiones sobre la experiencia argentina” in Proceedings of the XXIII International Seminar on Public
Budget, Buenos Aires 1996 (ASAP) 14
Central Bank rediscounts to provincial banks had enabled the provinces to run up large deficits in the
past. 15
The media reflects this opinion: “It was only during the first steps of recovering democracy,
characterized by civic euphoria, that the political parties, their leaders and the Congress counted with high esteem”; La Nación, Buenos Aires (March 7,1999 Section 7 page 5) 16
Laws 23696 and 23697/ 1989
17
Law 24629/1996
18
García, M. E. 2001- op.cit.
19
Gregorio Badeni mentioning Prof. Linares Quintana in La Prensa (p.19) , August 22 ,2004.
20
Under a system dating from 1853, while the central government collects taxes, the provinces were
guaranteed an automatic share of the revenues. That gave them no incentive to spend more efficiently. 21
Fondo de Reconversión Laboral del Sector Público Nacional
27
22
Increased inequality in income distribution, questioned independence of judicial system and quality of
public expenditure were the issues on discussion. 23
VI CLAD Congress, Buenos Aires, November 2001
24
Internal Control Authority Makón, M. 2000 - “Un nuevo marco de gestión para incrementar la calidad del gasto”- Revista del XIV
25
Seminario Nacional de Presupuesto Público - Asociación Argentina de Presupuesto y Administración Pública (155-174) 26
The quality and seriousness of this discussion is still undetermined, according the actual situation.
27
July 15th., 2001
28
“Evaluation Report on the Role of the IMF in Argentina IEO, 1991-2001” press briefing July 29, 2004
Washington, D.C. available at www.imf.org 29
Nicolás Fernández, President of the Energy and Fuels Committee , La Nación, August 12, 2004
30
This paper limits its scope on control, addressing internal control issues. In this section will be followed
arguments introduced in Garcia, M. E., 1999 a,b op.cit 31
Ley de Administración Financiera y de los Sistemas de Control del Sector Público Nacional (Ley
24156). Texto y reglamentación compilada por SIGEN. Buenos Aires,1997 32
Ley de Administración Financiera, op.cit
33
Petrei, H. 1997- “Presupuesto y control - Pautas de reforma para América Latina”- Interamerican
Development Bank p. 248 34
“Normas Generales de Control Interno”, 1998. Sindicatura General de la Nación, Buenos Aires.
35
“ Internal Control Integrated Framework”,1992. Committee of Sponsoring Organizations of the
Treadway Commission (COSO)-AICPA 36
Agustini, H. L., 1997 -“Fundamentos del nuevo modelo de control interno en Argentina”, III Encuentro
Nacional de Control Interno, Manizales (Colombia) 37
SIGEN’s Vision, Mission and Objectives - Version 30-07-97
38
Act 25233/1999
39
Ley 24156- Ley de Administración Financiera y de los Sistemas de Control del Sector Público Nacional
- título IV “Del Sistema de Control Interno” Texto institucional anotado, comentado y concordado. SIGEN, Abril 2003
28
40
Treasury Secretary during Dr. Cavallo first period in office as Economy Minister. Excerpt from : La
Reforma del Estado Nacional. Agosto 1999- Publicación n° 1- Fundación para el Desarrollo de Políticas Públicas 41
Spiller, P. T. and Tommasi, M. September 2003, “Policy Making in Argentina” available at
http://www.udesa.edu.ar/departamentos/economia/mariano_tommasi/papers/public%20policy.PDF
29
