Argentina - Second Provincial Reform Loan Project - San Juan
Kopp, Raymond J.
The assessment of outcome is unsatisfactory, sustainability unlikely, and the institutional development impact negligible. Key lessons convey that: 1) a national framework for fiscal reform is critical, for initially, specific sector-level reforms were promoted by the federal government, benefiting provincial efforts through fiscal incentives; however, and although the new federal administration did provide a program to support provinces to service their short-term debt, other measures actually hardened the budget constraint, by requiring federal authorization for external borrowing, and linking co-participation transfers, to the overall growth of the economy; 2) tensions between fiscal, and sector reform become exacerbated when fiscal adjustments are not taken up-front, suggesting reform success, and sustainability is more likely in provinces that have already achieved a level of control in their fiscal, and debt situations; 3) given the length of engagement, and political cycles, a more flexible instrument, other than a traditional adjustment operation, might be more appropriate, since the programs had combined policy actions, with longer institutional development activities; 4) project preparation should be guided by social, and institutional assessments, which would garnish public support for reforms, and in the case of San Juan, would have been useful in sustaining reforms across two administrations; and, 5) participatory approaches can facilitate implementation, and support sustainability.
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