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

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Jul 2013
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.