Solvencia fiscal para la sustentabilidad del gasto social: Un desafío pendiente en Argentina.

One of the recurring problems faced by fiscal policy in Argentina is the difficulty of achieving a balanced path of long-term fiscal performance. The incentives and pressures generated in periods of public spending growth to accelerate rapidly, surpassing the growth rate of the economy. On the contrary, when it slows, the impact on public finances and the need for adjustments which it implies minimizes the potential for public sector response, thus increasing the recessionary effect of the cycle. This has a negative effect on the provision of public goods and services provided by the state, especially on social spending. In this framework, the implementation of a fiscal rule for Argentina-saving resources in times of growth for use in periods of recession, thereby enabling sustainability over time in social services, remains a necessary reform. Both the successful experience of Chile's Structural Balance of 2000, as the negative results of the Argentina Fiscal Responsibility Law of 2004, are valuable lessons. Specifically, it is possible to observe that the success of a fiscal rule in a relevant way affect at least three aspects: a) the emergence conditions of the rule and the consensus among stakeholders; b) the operation dynamics of the Rule for the economic cycle and c) its strength and technical simplicity. Thus, we propose a new fiscal rule in Argentina, that sets the budget surplus achievement based on trend GDP and the creation of three specific funds to allocate the cash surplus: i) Retirement and Pension Fund (FJP), ii) Fund of Social Policy (FPS) and iii) Stabilization Fund (SF). With regard to the budget surplus target, it should be deemed a savings rate to be applied when GDP is above its trend level. A number that represents 1.5% of trend GDP, considering the strong current restrictions could be used as initial parameter. With respect to the resources distribution to the Funds, it is proposed to spend from the cash surplus the 1% of trend GDP to the FJP given the greater weight to the new future budget obligations, the 0.5% of trend GDP to the FPS, and the balance, if any, would become part of the FE. Although the biggest impact of economic and social crisis of 2001 were left behind, there remains the challenge of achieving medium and long term fiscal sustainability in a context where social challenges in the area increases. This proposal seeks to promote the discussion of this topic so relevant to the equitable development of Argentina.