NCPA - National Center for Policy Analysis

Government's Drag On Argentinean Entrepreneurs

August 2, 1996

Reformists in Argentina are pinning their hopes on the country's new economics minister, University of Chicago-educated Roque Fernandez, who is described as being "a no-nonsense economist with classical liberal views." He is said to be cognizant for the need for tax and public sector reform.

Even while Argentina's private sector has moved toward greater efficiency and competitiveness, the government sector -- on the federal, provincial and local levels -- remains bloated, inefficient and interventionist, according to local experts.

  • Overall government spending has increased 75 percent -- from $47.3 billion in 1991 to $82.3 billion in 1995.
  • The Office of the President includes 10 secretariats and 12 independent agencies -- with 20,000 employees and an annual budget of $1.2 billion.
  • Social programs account for over 60 percent of total spending and in agencies created to help the poor, 70 percent of the budget is spent on bureaucrats' salaries.

Critics charge that provincial and municipal fiscal management is chaotic and irresponsible.

  • The number of employees in provincial governments increased 80 percent from 1984 to 1995.
  • Total spending by the provinces grew 79 percent from 1991 to 1995.
  • Municipal spending grew 91 percent over the same period.
  • In some parts of the country, there is one provincial employee for every ten residents, and public employee payrolls siphon-off 70 to 80 percent of provincial government budgets.

While the federal government won't reform itself, it has promised funding to the provinces if they privatize public enterprise. But observers say the results have been disappointing due to a lingering faith in a vast welfare state.

Source: Gerardo Bongiovanni (Liberty Foundation in Rosario, Argentina), "A Tough Road for Argentina's New Economics Minister," Wall Street Journal, August 2, 1996.

 

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