Argentina: Preconditions for the Establishment of a Fiscal Rule including a Structural Fiscal Balance Component

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Date issued
Jul 2013
Subject
Monetary Policy;
Fiscal Policy;
Fiscal Rule;
Public Expenditure;
Government Revenue
JEL code
E62 - Fiscal Policy;
H60 - National Budget, Deficit, and Debt: General
Country
Argentina
Category
Discussion Papers
This paper discusses Argentina's preparedness to implement a structural fiscal balance (SFB) rule. The authors conclude that the country does not yet have the conditions required to consider establishing an SFB rule. From the 11 preconditions outlined, Argentina only meets two of them -debt sustainability and soundness of the financial system - and with important caveats. On one hand, in order to preserve the sustainability of indebtedness, it becomes necessary to maintain a deficient tax structure; on the other, the banking system's soundness could be impacted by the lack of independence of the Central Bank of Argentina from the executive branch.