2023-06-10 03:30:00
Enrique Omar Driussi*
Anyone who looks at the 2023 Budget will find 41 agencies with an excessive number of programs, which fragments public spending. The 13 ministries might be cut in half.
How can it be that a province like Neuquén, blessed by the wealth of its natural resources; with a current budget of $800,000,000,000 (eight hundred billion) can be in deficit and have a public debt of $250,000,000,000 (Two Hundred and Fifty Thousand Million)? according to data from the Ministry of Economy and Infrastructure.
Neuquén is the evidence of the “paradox of abundance”. According to this theory, states with an abundant endowment of natural resources have little economic and social development. This is corroborated by the latest calculation of the Gross Geographic Product, which shows the participation of the economic sectors that comprise it. The largest corresponds to Mines and Quarries with 47.5%. The second largest is Public Administration with 9.2%. And in the last places, the manufacturing industry reaches only 3.1%; and the Agricultural sector barely 0.8%. (Provincial Directorate of Statistics and Censuses).
The next administration must carry out the necessary reforms to 1) ensure fiscal solvency, reducing the size of the State and, 2) Channel these resources towards primary production and industrialization at source to generate greater added value.
ISSN integration
Before the elections, Rolando Figueroa said: “It is necessary to include in the Budget, the financing of the ISSN pension deficit.” And it is an obligation from a legal and technical point of view.
Since 1995, Law 2141 on Financial Administration and Control establishes in its Art. 6) the conformation of the Provincial Administration, and stipulates in subsection e) “the decentralized organizations, including the Social Security Institute of Neuquén.”
In 2006, the Provincial Legislature sanctioned Law 2514 of adhesion to the Federal Regime of Fiscal Responsibility, which obliges to consolidate the pension income and expenses of the Social Security Institutions.
If since then -and quarterly-, Neuquén must report the consolidated execution including the ISSN, why doesn’t the Provincial Budget approved by that same Legislature include it? The ISSN’s pension deficit arises because its own resources (personal contributions and employer contributions) are not enough. Therefore, the Provincial Treasury must cover it with an additional contribution. For this, it is necessary to operate and restructure the huge budget of provincial expenses.
Reorganization of the State
Anyone who sees the 2023 Budget will find 41 agencies with an excessive amount of programs that atomizes public spending. There are 13 ministries (some created by demagogic fashions) when they might be reduced by half.
The organization of the State structure must be elaborated from the Budget Classifier by Purpose and Government Functions, applying principles of economy, efficiency and effectiveness that govern the administration of public funds.
There are a number of trust funds that are contrary to the budgetary principles of universality of resources (non-assignment) and of budgetary and cash unity. The Single Treasury Account system was designed for the State to centralize collecting and paying accounts, with the purpose of guaranteeing fiscal solvency.
Within the Neuquén Provincial Administration, there is talk of two rich states (Judicial Power and Legislative Power) and a poor state (Executive Power). There is an arbitrary mechanism for the automatic allocation of 18% of the total National Tax Sharing to the Judiciary and 7.5% to the Legislative Branch. No one denies the independence of these State powers, nor their constitutional powers to approve their own budget. But the three powers make up the Central Administration and must be financed with the common resources of the Provincial Treasury, only up to the concurrence of their necessary expenses. The surplus resources in those powers are the shortages in other areas of the State.
unfulfilled plans
In 1998, the IADEP (Autonomous Institute for Productive Development) was created, affecting 3% of oil and gas royalties to transform the provincial economic structure, in activities such as fruit growing, horticulture, livestock, forestry, tourism, mining, industry, etc.
Objective evaluation criteria were established: greater employment of labor in relation to the capital invested; use of local raw materials; main market outside the limits of the province; location of the enterprise in the interior of the province; and a lower percentage of financing required in relation to the total investment.
To declare those projects financed by the IADEP “eligible”, the Executive Power had to raise a bill of the “General Framework of Productive Development” before each Annual Budget. 25 years passed and it was never fulfilled.
* Former Provincial Budget Director and Fiscal Auditor. Currently Academic Director of ASAP Filial Comahue.
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#reforms #State #Neuquén
