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DRAFT Translation
(As modified by the Executive)
Republica Argentina
Fiscal Convertibility Law
Section 1. The authorities of the State shall adjust the management of public resources to the
provisions of the current law.
Section 2. The Public Administration General Budget Law shall be subject to the following
rules, regardless the provisions of Law 24.156 and Law 24.629:
a) It shall include all current and capital expenses to be financed by taxes, fees, and other
contributions set by specific regulations, public debt and rates of services set by government
authorities. It shall include the financial flows that originate in the making and use of fiduciary
funds.
b) The fiscal deficit, resulting from the difference between current and capital revenues, on
accrual basis, minus the current and capital expenses of the non financial national public sector,
shall not exceed 1,9% of GDP in 1999. Re-estimating said deficit, excluding all revenues
from
selling residual assets of private companies and concessions, shall determine the basic deficit of
the following years, until it reaches a balance in the year 2003. This deficit must be reduced a
minimum of 0,4% of the GDP in the year 2001, and 0,6% in the year 2002. As from 2003, a
balanced financial result must be assured.
c) The real rate of increase of the primary public expenditure, defined as the result of adding the
current and capital expenses and subtracting the interest of the public debt, cannot exceed the
rate of real increase of the GDP. When the real rate of change in the GDP is negative, the
primary expenditure could at least remain constant in current money.
d) No less than 1% in the year 2000, 1,5% in the year 2001 and 2% in the rest of the years of the
Treasury‘s resources, the fiscal surplus, and 50% of the proceeds from asset sales and from
granting State concessions, shall be allotted to the Fund mentioned in Section 9, of the current
Law.
e) The Executive shall elaborate a multi-annual budget of at least 3 (three years), subject to the
provisions of the current law, and particularly, section 6 of said law.
f) The total public debt of the State cannot increase by more than the amount of the Non
Financial Public Sector’s deficit, the interest capitalization, the changes in value of currency
reserves, the loans that the State passes again to the provinces, and the payment set by Laws
23.982, 24.043, 24.073, 24.130 and 24.441, whose annual payment limit shall be decreed by
each public budget law. This restriction can be surpassed when the debt is assigned to cancel a
public debt, with expiring dates on the following year.
Section 3. The enforcement of the rules set in the previous and subsequent sections, shall be
complemented with the following budget administration criteria:
a)
Current and capital expenditures, that have not been accrued through previous year
budgets, shall not be considered as financial investment (amortization of debt) except the
debts referred to in Subsection f), Section 2, of the current law.
b) In case of compromising current or future expenses, which exceed the ones authorized by the
Public Administration General Budget Law, the Secretariat of the Treasury, and the National
General Audit Office, acknowledging such situation, shall immediately inform the General
Attorney’s office in order to file legal actions on account of violation of Section 248 of the
Criminal Code.
Section 4. No funds or institutions that imply extra-budgetary expenditures shall be established.
Section 5. With the purpose of advancing in the process of the State‘s improvement and of
increasing the efficiency and quality of the public office, the following is decreed:
a) the creation of every decentralized institution and public financial and non financial
enterprise shall require the enactment of the pertinent law.
b) the jurisdictions and institutions of the Public Administration that execute programs
regarding Social Services, shall abide by managerial mechanisms and community
control before the 31st of December of 2001, in accordance with the Executive´s regulation,
aside from the control devices projected in Law 24.156.
c) the Chief of Cabinet of Ministers is hereby authorized, as from the year 2000, to enter into
program-agreements with the enforcement units of budgetary programs, in order to achieve a
greater efficiency and quality in their administration. Said agreements shall have a
maximum duration of 4 (four) years and shall be agreed upon within the following
guidelines:
1. Commitment of the enforcement unit regarding policy implementation, and goals
duly quantified.
2. Spending levels to be assigned for each year of the agreement’s duration.
3. A special system shall be agreed upon for the approval of certain budget
modifications.
4. A special system shall be agreed upon for the non personal goods and service trade.
5. Authority to set up rewards for employees of the program, based on productivity,
within the pertinent employment expense allocation, set for each year the agreement
lasts, according to the authority stated by the State as employer by Law 14.250 and its
amendments and /or Law 24.185 and its regulations.
6. Power to modify the organization pattern, to eliminate vacant offices, to modify the
employment structure within the current personnel expenditure, and re-allocate
personnel in the program.
7. Power to enact penalties for the programs’ authorities in case of failure to perform the
obligations assumed, which shall be regulated by the Executive.
d) The Expenditure Quality Evaluation Program is hereby established in order to increase the
quality of services in charge of the State, by a systematic assessment of service costs in relation
to its results, to improve the managing performance of the officers and increase the efficiency
of public institutions, optimizing the usage of human resources in different areas of the State.
The program shall be located at the Jefatura de Gabinete de Ministros, with the participation of
the Ministry of Economy, according to Title II, Section II, Subsection V of Law 24.156 of
Financial Administration, and shall include the Centralized and Decentralized Administration as
a whole.
Section 6.
The Executive shall include in the Public Administration General Budget bill, along with the
Monetary Program and the Public Sector Exchange Budget, a multi-annual budget for a minimum of
3 (three) years, Said budget shall include the following:
a) Projections of resources by budget titles.
b) Projections of expenditures by goals, functions and economic classification.
c) Term investment programs
d) Loan transaction programs derived from multilateral institutions.
e) General criteria referred to capturing other financial sources.
f) Program-agreements entered and their pertinent amounts.
g) Description of budget policies that sustain the anticipated projections.
Section 7.
Once the previous year’s Investment Account has been sent to Congress, and prior to sending the
subsequent year’s Budget Law, the Chief of Cabinet of Ministers and the Minister of Economy shall
attend a joint session with the Budget and Economy Committees of the House of Deputies and
Senators, in order to render an overall report which includes:
a) The enforcement appraisal of the previous year’s budget, compared with the Budget enacted by
Congress and its enforcement detailed in the Investment Account, explaining the differences
regarding revenues, expenditures and financial results.
b) The estimate of the budget’s implementation for the current year, comparing it with the budget
passed on by Congress and explaining the differences deemed to happen regarding revenues,
expenditures and financial results.
c) The orders implemented or to be implemented to compensate eventual deviations that have
occurred or might be foreseen in the enforcement of the budget referred to in Section II, Subsections b), c), d) and f) of the current law.
d) The development of the Expenditure Quality Evaluation Program. The subjects referred to in
Subsection b) and those related to the allocation of Fund resources referred to in Section 9 are
also submitted to Congress by the Chief of Cabinet of Ministers every three months. The
program, mentioned at the beginning of this subsection shall be reported every six months.
The Economy Secretariat shall intervene whenever its jurisdiction is concerned, and give out
information, according to dispositions of Law 24.156 (Financial Administration).
Section 8.
The documents and demonstrative statements brought about within the range of the Public
Administration, and that are named hereafter, shall be considered public information and have
freedom of access for all institutions or individuals interested in it:
a) Execution states of budgets of expenditures and estimate of resources, up to the ultimate
level of disaggregation process.
b) Purchase orders, all kinds of contracts signed by the pertinent authority, as well as
imprest account statements.
c) Money orders entered to the Department of the Treasury, and the rest of the treasury
departments within the Public Administration.
d) Payments made by the Department of the Treasury and the rest of the treasury departments
within the Public Administration.
e) Financial and occupation data of the Human Resources System, managed by the Economy
Secretariat, regarding permanent, hired, and temporary personnel, including those of projects
financed by multilateral institutions.
f) A list of pensions and retirement beneficiaries from the armed forces and security, whatever
their origin.
g) Statement of condition, contour profile and cost of the public debt, as well as collateral
signatures and endorsements issued, and future financial years’ obligations, that have already
been assumed.
h) A list of accounts receivable
i) Inventory of real state and of financial investments.
j) Statements of compliance of tax, pension, and customs liabilities, from companies and
individuals in regard to the Federal Administration of Public Revenue, according to the rules
set by said Institution.
k) Information regarding regulation and control of public services, included in the regulating
agencies and control institutions.
l) Whatever information is needed for the social expenses community control to take place, as
referred to by Section 5, Subsection b), of the current law. This information shall be given out
by the Chief of Cabinet of Ministers, to individuals who require it.
.
The Public General Audit shall monitor its compliance and inform the House of Senators and the
House of Deputies, from the moment the current law is enacted, about the progress of its
implementation and the results of its enforcement
.
Section 9.
The Anti-cyclical Tax Fund is hereby created, with 50% of the product of the resources coming
from privatizations, concessions, sale of capital assets, and sale of the remnant of shares of
undertakings from state to private ownership, or their chattel mortgage, except the Banco
Hipotecario’s shares and according to the provisions of Section 10 and 11 of Law 23.985, and
Section 28 and 29 of Law 24.948, and during the term set in this last law; with the financial surplus
that result from each fiscal year, no less than 1% of the ordinary resources of the Department of
Treasury in the year 2000; 1,5% for the year 2001, and 2% as from 2002; and with the rents
resulting from the Fund. Said Fund shall be managed by the Ministry of Economy, following the
same criteria used by the Banco Central regarding foreign reserves.
This Fund shall increase until it reaches an amount equivalent to 3% of the GDP, and shall be used
whenever an economic downturn takes place.
When the resources reach a peak of 3% of the GDP, the accrued surplus during that year could be
applied to the forgiveness of the foreign debt..
The resources assigned to the Fund, shall be included as financial investment in the pertinent annual
budgets.
Once the circumstances have been duly defined for the use of the Fund’s resources, these shall be
constraint to the following conditions:
a) The use of resources of a year cannot exceed 50% of the total amount accrued at the beginning
of the year.
b) The Fund’s resources cannot be assigned to finance permanent increases of the primary
expenditure level neither in areas of the Public Administration nor in provincial or municipal
administrations.
The Executive is authorized to use the Fund under the preceding dispositions, and subject to the
reports sent to Congress, referred to in Section 7,. Subsection d , of the current law.
Section 10.
The Executive shall invite the Provincial Governors and the Autonomous Government of the City
of Buenos Aires, to dictate legal provisions in accordance with regulations of the current law and
adapted to provincial specifications.
Section 11.
Be it notified to the Executive.