Fiscal Reform and Macroeconomic Stabilization in Argentina

GUILLERMO ROZENWURCEL

Fiscal Reform and Structural Change in Developing Countries

MacMillan

Lugar: Gran Bretaña; Año: 2000; p. 26 - 58

This paper discusses the relationship between stabilization and fiscal reform in the context of the Convertibility Plan presently being implemented in Argentina, mainly focusing on tax reform and privatizations.             The rapid increase in tax receipts has been a decisive factor in the credibility and sustainability of the stabilization program. Two were the components of the reform process which were responsible for that outcome: the progressive establishment of VAT as the core of the tax system, and a radical transformation in tax administration, including much more rigorous penalties for tax evasion. Nevertheless, according to the analysis presented in the paper, there is still ample room to further improve the tax system´s performance, not only from the point of view of tax collection, but also from that of equity and efficiency.             With regard to privatizations, it is still too early to fully appraise their long-run impact on the Argentine economy. However, despite the standard justification on long-term efficiency grounds, the paper argues that so far they have basically served short-term macroeconomic purposes.