METHODOLOGY FOR THE CALCULATION OF CONSOLIDATED PUBLIC EXPENDITURE

  

Introduction

  This annex details the methodology applied for the calculation of CPE and its components. It should be noted that the differences between this methodology and that used by Flood et al. (1994) are not substantial. The following points develop the principal aspects of these components, identifying in each case the changes that have been made.

  In first place the procedures for the calculation of CPE for each level of government are shown, detailing the modalities used for the calculation of budgetary and extra-budgetary disbursements. Details are then provided of the principal criteria for classifying CPE and PSE. Lastly the information used to calculate the series is shown as a percentage of GDP and in per capita terms, and a description is provided of the procedure applied to deflate the values for the series.

  

1. The public expenditure consolidation process

  To perform consolidation of the expenditure included in the budgets the following structure was applied:  

The Argentine Public Sector

 

 

NATIONAL LEVEL

Central Administration and decentralized non-business entities

 

 

 

Social security institutions

 

 

 

Public companies and corporations

PUBLIC

NON-FINANCIAL PUBLIC SECTOR

PROVINCIAL LEVEL

Central Administration and decentralized non-business entities and special accounts

SECTOR

 

 

Social security institutions

 

 

 

Public companies and corporations

 

 

MUNICIPAL LEVEL

Central Administration

 

 

 

Social security institutions

 

 

PUBLIC

Non-banking

 

FINANCIAL PUBLIC SECTOR

FINANCIAL

 

 

 

 

INSTITUTIONS

Banking

 

 

 

 

Source: Secretaría de Hacienda (1997)

Calculation of GPS includes only outlays by the non-financial public sector corresponding to the three levels of government- Nation, provinces and CBA and municipalities- regardless of whether or not they were recorded in their respective budgets. In addition, it is necessary to clarify that the expenditure values shown on the tables include both current and capital expenditure.

As indicated below, in points 2.2 and 3.1.2 public expenditure not reflected in the budget (off-budget expenditure) corresponding to federal health security systems depending from the ANSSAL, provincial health security systems and family allowances, which are not included in the above table, have been included in the calculation of the CPE.

Information on CPE is detailed by level of government. The criterion adopted has consisted of calculating expenditure in the jurisdiction where executed and not where financed. As a result, to avoid duplication, transfers of funds from the nation to provinces and municipalities, as well as from provinces to municipalities, have been deducted from the total for the financing jurisdiction for inclusion in the jurisdiction where executed .

The following tables detail the consolidation process for public expenditure in 1996. The columns show expenditure by each level of government – National Administration, provinces and CBA and municipalities – and the consolidated expenditure, and the rows indicate purposes and functions. The first two columns show the budget execution of the National Administration and transfers that are made to the provinces, municipalities, public companies, SNSS, health security systems and family allowances. The difference between the two is shown in column 3, obtaining the net execution at federal level. Public company spending and total expenditure on social security, health security systems and family allowances are added in. The total shown in column 7 corresponds to total expenditure executed by the National Administration. To calculate provincial and CBA expenditure a similar procedure is used to that detailed previously (columns 8 to 13). Expenditure by municipalities (column 14) includes expenses financed out of contributions from the provinces and the Nation, and with the municipalities' own resources. To calculate the CPE the expenditure of the National Administration (column 7) the provinces and CBA (column 13) and the municipalities (column 14) are added together.

  

 

The Public Expenditure Consolidation Process, 1996

in millions of current pesos

 

A. National Government

National Government

(1)

(2)

(3) = (1) - (2)

(4)

(5)

(6)

(7) = (3+4+5+6)

Purpose/Function

Budget Execution

Deductions (a)

Net

Execution

Public companies

SNSS and Public Debt

Off-Budget (b)

Total

TOTAL EXPENDITURE

43.616,71

30.893,46

12.723,25

433,05

22.648,39

8.191,07

43.995,76

I. OPERATION OF THE STATE

8.130,81

1.358,37

6.772,44

6.772,44

II. PUBLIC SOCIAL EXPENDITURE

28.538,38

24.244,42

4.293,97

12,15

17.715,66

8.191,07

30.212,85

II.1. Education, Culture, Science and Technology

3.041,59

395,65

2.645,94

2.645,94

II.2. Health

3.676,05

3.029,18

646,87

5.919,48

6.566,35

II.3. Water and Sanitary Services

53,24

12,33

40,90

12,15

53,05

II.4. Housing

923,48

916,82

6,66

6,66

II.5. Social Promotion and Assistance

1.655,55

1.445,13

210,42

580,11

790,53

II.6. Social Security

18.064,20

18.064,20

0,00

17.715,66

17.715,66

II.7. Labor

1.124,27

381,10

743,17

1.691,48

2.434,65

II.8. Other Urban Services

0,00

0,00

III. PUBLIC SPENDING ON ECONOMIC SERVICES

2.760,19

1.103,35

1.656,84

420,90

2.077,74

IV. PUBLIC DEBT SERVICING

4.187,33

4.187,33

0,00

4.932,73

4.932,73

(a) includes transfers to provinces, municipalities, public companies, SNSS and health security systems. In the case of social security and public debt servicing the original amount is subtracted so that net execution is zero, because they are included later for another amount in column (5). Under the labor function the family allowance program has been deducted, which is included in column (6).

(b) health security systems and family allowances.

 

 

 

 

B. Provinces, CBA and Municipalities

Provinces and CBA

Municipalities

(8)

(9)

(10) = (8) - (9)

(11)

(12)

(13) = (10+11+12)

(14)

Purpose/Function

Budget Execution

Deductions (a)

Net

Execution

Social Security

Off-Budget (d)

Total

Total

TOTAL EXPENDITURE

30.192,70

3.842,03

26.350,67

4.069,58

1828,5

32.248,72

6.771,01

I. OPERATION OF THE STATE

10.062,93

3.147,57

6.915,36

6.915,36

2.408,09

II. PUBLIC SOCIAL EXPENDITURE

15.314,80

694,46

14.620,34

4.069,58

1828,5

20.518,40

3.662,43

II.1. Education, Culture, Science and Technology

8.301,90

8.301,90

8.301,90

276,69

II.2. Health

3.537,85

3.537,85

1761,3

5.299,11

836,71

II.3. Water and Sanitary Services

283,59

283,59

283,59

0

II.4. Housing

1.128,59

1.128,59

1.128,59

0

II.5. Social Promotion and Assistance

1.064,71

1.064,71

67,2

1.131,92

644,52

II.6. Social Security

694,46

694,46

0,00

4.069,58

4.069,58

0

II.7. Labor

16,93

16,93

16,93

0

II.8. Other Urban Services

286,76

286,76

286,76

1.904,50

III. PUBLIC SPENDING ON ECONOMIC SERVICES

3.811,01

3.811,01

3.811,01

648,91

IV. PUBLIC DEBT SERVICING

1.003,95

1.003,95

1.003,95

51,58

(c) to municipalities and social security organisms

(d) health security systems

 

C. Consolidated Expenditure

(7) = (3+4+5+6)

(13) = (10+11+12)

(14)

(15) = (7+13+14)

Purpose/Function

National

Provinces and

Municipalities

Consolidated

Government

CBA

TOTAL EXPENDITURE

43.995,76

32.248,72

6.771,01

83.015,49

I. OPERATION OF THE STATE

6.772,44

6.915,36

2.408,09

16.095,89

II. PUBLIC SOCIAL EXPENDITURE

30.212,85

20.518,40

3.662,43

54.393,68

II.1. Education, Culture, Science and Technology

2.645,94

8.301,90

276,69

11.224,53

II.2. Health

6.566,35

5.299,11

836,71

12.702,17

II.3. Water and Sanitary Services

53,05

283,59

0,00

336,64

II.4. Housing

6,66

1.128,59

0,00

1.135,25

II.5. Social Promotion and Assistance

790,53

1.131,92

644,52

2.566,97

II.6. Social Security

17.715,66

4.069,58

0,00

21.785,24

II.7. Labor

2.434,65

16,93

0,00

2.451,58

II.8. Other Urban Services

0,00

286,76

1.904,50

2.191,26

III. PUBLIC SPENDING ON ECONOMIC SERVICES

2.077,74

3.811,01

648,91

6.537,66

IV. PUBLIC DEBT SERVICING

4.932,73

1.003,95

51,58

5.988,26

Source: Dirección Nacional de Programación del Gasto Social – Secretaría de Programación Económica y Regional

Amounts transferred by the Nation to the provinces and the municipalities are not necessarily executed in the same function giving rise to them. For example, transfers to the Fondo del Conurbano are included as a total under the social promotion and assistance function for the National Administration, while provincial spending is distributed according to the functions on which spending has been made (education, health, social promotion and assistance, etc.).

  A detail is provided below of the outlays at each level of government included in CPE, with an indication in each case of the procedures and assumptions employed and the sources of information used.

 2. Sources and procedures for the calculation of expenditure at National Government level.

 2.1 Expenditure included in the budgets

2.1.1 Expenditure by the National Administration

  Expenditure by the National Administration includes outlays by the Central Administration and decentralized bodies.

  For the period 1980-1992 the recording of execution of expenditure was made on the basis of the "commitment" accounting stage method of recognition, according to the Law on Accounting then in force. For the period 1993-1997 the accrual basis has been followed, on the basis of the criterion introduced by the new law on Financial Administration.

National Administration expenditure series have as their source of information the Secretaría de Hacienda de la Nación (National Treasury - SH). Data for the period 1980-1992 arose from a survey performed by the Contaduría General de la Nación, while data for 1993 to 1997 has been taken from the Sistema Integrado de Información Financiera (Integrated System for Financial Information - SIDIF). This system is a data base at the SH with updated information on the budget of the National Administration with the maximum degree of detail according to the types of classification – institutional, geographical, by objective of expenditure, purpose/function, and the various accounting stages – initial credit, current credit, commitment, accrued and paid.

  To be able to obtain an improved classification of expenditure and a coverage more in line with their nature, the following criteria have been adopted (implying changes to the calculations made in previous studies): 1) expenditure on personnel at military hospitals in the series for the period 1980-1992, instead of being included in the defense and security function was recorded under the health function. The amount was determined by estimating the weight of spending on health personnel as a percentage of total spending by the Army and Police on that heading in 1993, applying this percentage to spending on personnel in the mentioned jurisdictions in the period 1980-1992; 2) classification by function and by program differs slightly from that made by the SH. This variation derives from a reclassification by the DNPGS. As an illustration, a reclassification has been prepared for 1996. The table shows on the one hand the functions to which the programs belong according to the SIDIF and on the other the function under which they are classified according to the criterion adopted by the DNPGS.

  

 Reclassification of Programs , 1996

in thousands of current pesos

 

Reclassified Programs

Function as per SIDIF

Function as per DNPGS

Accrued

($)

Jur.

Ser.

Prog.

20

 

 

PRESIDENCIA DE LA NACION

 

 

17.944,60

 

303

 

SECRETARIA PREVENCION Y LUCHA CONTRA EL NARCOTRAFICO

 

SOCIAL

 

17.944,60

 

 

16

Prevention of Drug Addiction and Fight Against Drug Trafficking

PROMOTION AND

HEALTH

17.944,60

80

 

 

MSyAS

ASSISTANCE

 

4.195,22

 

902

 

CENARESO

 

 

4.195,22

 

 

52

Integrated Assistance and Prevention of Drug Addiction - CENARESO

 

 

4.195.22

75

 

 

MTySS

 

 

796.704,38

 

850

 

ANSeS

 

 

796.704,38

 

 

4

Activities common to Programs 18 and 19

SOCIAL

LABOR

13.492,97

 

 

18

Unemployment Insurance Payments

SECURITY

 

402.113,99

 

 

19

Family Allowance Payments (Reimbursements) - ANSeS

 

 

381.097,42

20

 

 

PRESIDENCIA DE LA NACION

EDUCATION

 

19.755,02

 

308

 

SECRETARIA DE DEPORTES

AND

 

19.755,02

 

 

1

Central Activities

CULTURE

SOCIAL

5.404,53

 

 

16

Promotion of Sports in Society and Recreation

 

PROMOTION AND

5.869,29

 

 

17

Development of High Performance in sports

 

ASSISTANCE

8.481,20

50

 

 

MEyOSP

 

 

9.691,79

 

357

 

MEyOSP

AGRICULTURE

 

9.691,79

 

 

37

Campo Unido Program for Agricultural Social Development

 

 

9.691,79

20

 

 

PRESIDENCIA DE LA NACION

 

ENERGY AND

76.714,90

 

105

 

CNEA

SCIENCE

FUEL (1)

76.714,90

 

 

16

Nuclear Research, Development and Production

AND

 

76.714,90

50

 

 

MEyOSP

TECHNOLOGY

EDUCATION

5.059,88

 

357

 

MEyOSP

 

CULTURE AND

5.059,88

 

 

25

Execution of Projects for Works of Architecture

 

SCIENCE AND TECHNOLOGY

5.059,88

50

 

 

MEyOSP

ENERGY AND

PRIMARY PRODUCTION

14.243,65

 

357

 

MEyOSP

FUEL

 

14.243,65

 

 

32

Design and Execution of Geological and Mining Policy

 

 

14.243,65

(1) except for activity 2, which is retained in science and technology.

  

2.1.2 Public company expenditure

  Maintaining the methodology of our previous publications, outlays by companies which until 1992 consolidated in the budget and have not been privatized were recorded following international methodology, which considers as an expense the operating deficit plus capital expenditure. The deficit has been considered net of interest, as the latter was included under public debt expenditure.

  In 1996 the companies included in the calculation were as follows: Agua y Energía Eléctrica, Ente Binacional Yacyretá, Unidad Especial Sistema de Transmisión Yacyretá, Gas del Estado, Hidroeléctrica Norpatagónica, Pichi Picún Leufú, Nucleoeléctrica Argentina S.A., Yacimientos Carboníferos Fiscales, SEGBA, Obras Sanitarias de la Nación, Aerolíneas Argentinas, Empresa Líneas Marítimas Argentinas, Administración General de Puertos, Ferrocarriles Argentinos, Ferrocarril General Belgrano S.A., Ferrocarriles Metropolitanos S.A., ENTel, ENCOTEL and ENCOTESA. It should be noted that this group of companies included both those in operation and those that have been privatized but which currently have a "residual" nature.

  The Comisión Nacional de Energía Atómica (CNEA) merits special mention, as it was a decentralized entity until 1995, when it was split up. A State company (Nucleoeléctrica Argentina S.A.) was created with one part, while certain other activities continued to form part of the decentralized entity. The latter have been recorded in the science and technology sub-function and in the energy and fuel function. The activities of the State company were accounted for following the traditional methodology (sum of current outlays and capital spending) so as to preserve the consistency of the series.  

3. Expenditure of the national retirement and pensions system

 Retirement and pensions system expenditure includes outlays corresponding to: a) payment of retirement benefits and pensions from the unfunded system - Sistema Integrado de Jubilaciones y Pensiones (SIJP); b) payment of the basic universal benefit (PBU), compensatory benefits (PC) and other benefits received by beneficiaries of the funded (private) system that are payable by the State; c) payment of non-contributory pensions; d) payment of retirement benefits to Armed Forces and Security personnel; and e) special regimes: Foreign Ministry, Legislative Branch and the Judiciary. Social security outlays have included both family allowances and the subsidies received by retirees and pensioners – for burial, utility rate reductions , etc.- as well as the administrative expenses related to the operation of the systems indicated.

  The "retirement and pensions system" ("previsión social") concept used in this present report differs from that of social security used by the SH, which has a wider scope. Expenditure items not related to pension benefits but paid through the ANSeS have been deducted from social security totals. Batches corresponding to unemployment insurance and family allowances for employed personnel in the private sector have been included in the labor function.

  Until 1992 the figures were based on the expenditure recorded under the social security purpose plus disbursements by the ANSeS under the savings-investment scheme. The SH recorded this expenditure in the "cash" accounting stage, as a result of which the accrued debt documented in BOCONES as from 1991 was not taken into account. However, this has been included as from 1985. It should be noted that the values recorded represent the amounts actually received by the beneficiaries at that time.

  

2.1.4 Recording of expenditure from Debt Recognition

  The recognition of debt generated in the period 1985-1992 as a result of non-compliance by the State with social security legislation and contracts with suppliers was instrumented as from 1991 in the form of government securities known as "social security BOCONES I and II" and "supplier BOCONES". These bonds represented the taking on of a fiscal commitment which was not contemplated within the budgetary mechanism.

  To be able to incorporate the accrual of the debt and unify the expenditure of this function with that of the remaining sectors, the data series for the period 1985-1992 has been adjusted with information from the SSPM.

 

Allocation of Expenditure from Debt Recognition

1980-1986: thousands of current pesos; 1987-1997: millions of current pesos

 

Year

Retirement and pension system

Other Spending on Economic Services

 

Expenditure recorded

Expenditure recognized in BOCONES

Total

Expenditure recorded

Expenditure recognized in BOCONES

Total

1980

0,179

0,179

0,018

0,018

1981

0,356

0,356

0,034

0,034

1982

0,733

0,733

0,124

0,124

1983

3,434

3,434

0,859

0,859

1984

26,79

26,79

5,72

5,72

1985

217,47

36,70

254,17

36,03

42,70

78,73

1986

407,34

67,10

474,44

35,14

78,00

113,14

1987

1,05

0,23

1,27

0,07

0,23

0,30

1988

3,68

1,38

5,05

0,26

1,28

1,54

1989

94,12

103,40

197,52

9,22

74,10

83,32

1990

2.739

1.407

4.145

153

910

1.063

1991

7.782

3.110

10.892

449

357

806

1992

11.197

2.316

13.512

363

363

1993

13.794

13.794

133

133

1994

16.277

16.277

185

185

1995

16.569

16.569

141

141

1996

17.716

17.716

141

141

1997

17.914

17.914

151

151

Source: Dirección Nacional de Programación del Gasto Social – Secretaría de Programación Económica y Regional

  

2.1.5 National Public Debt Servicing

  Expenditure under this heading corresponds to the payment of interest on the debt of the National Administration and public companies owned by the federal government. In the period 1980-1997 consideration was given to the interest on internal and external debt recorded in the savings-investment schemes of the federal public sector (National Administration and public companies) on an accrual basis according to the SH. Interest accrued on the social security and supplier BOCONES was added to these amounts, as it was not included in the records of the SH, having been capitalized.

  The procedure applied to calculate the interest capitalized on the various BOCON series was as follows. Based on the stock of debt in BOCONES at December 31, 1996, interest was charged to the year in which it accrued and was capitalized, adjusted for transactions involving early redemption, repurchases or capitalizations that took place between 1991 and 1996.  

For this report the values for public debt servicing provided by the SH were used, adjusted as mentioned in the previous paragraph. Some studies suggest that these amounts have been understated , especially for the period 1984-1991. As the table shows, estimates by the SSPM – calculated on the basis of the reconstruction of the stock of debt, both recorded and unrecorded, assuming rates of interest similar to LIBOR – result in figures significantly higher than those of the SH. In that series interest reaches 8.6% of GDP in 1989 and values close to 4% for the rest of the eighties, while the SH records 2.6% and values of close to 3.7% respectively. For the early nineties other series - such as that presented by Dal Din and López Isnardi (1998)- estimate values similar to those of the SSPM. It should be noted that these differences affect the pattern of total expenditure during the whole period, but very particularly that for 1989 and 1990.

Servicing of the Public Debt of the National Government

as a % of GDP

 

Year

Secretaría de Hacienda (A)

Estimates by the SSPM (B)

 

Servicing of the Public Debt (1)

Total spending (2)

Ratio

(1) / (2)

Servicing of the Public Debt (1)

Total spending (2)

Ratio

(1) / (2)

1980

2,45

21,22

12%

2,45

21,22

12%

1981

5,23

25,16

21%

5,23

25,16

21%

1982

6,91

24,53

28%

6,90

24,53

28%

1983

3,60

20,90

17%

4,21

21,50

20%

1984

3,30

19,31

17%

3,62

19,63

18%

1985

4,03

22,56

18%

3,86

22,39

17%

1986

2,83

20,66

14%

3,17

21,00

15%

1987

2,66

22,60

12%

3,91

23,86

16%

1988

1,98

20,62

10%

4,78

23,42

20%

1989

2,64

22,61

12%

8,58

28,55

30%

1990

1,39

17,94

8%

4,87

21,41

23%

1991

1,67

16,80

10%

3,07

18,20

17%

1992

2,15

16,14

13%

2,01

16,00

13%

1993

1,50

15,03

10%

1,43

14,96

10%

1994

1,39

15,14

9%

1,36

15,11

9%

1995

1,79

15,81

11%

1,75

15,76

11%

1996

1,66

14,80

11%

1,93

15,07

13%

1997

2,07

14,33

14%

1,91

14,17

13%

Notes:

Series A: based on the savings-investment scheme of the Secretaría de Hacienda and the accrual of BOCONES by the Subsecretaría de Programación Macroeconómica and the Secretaría de Hacienda

Series B: based on estimates according to the stock of debt recorded by the Subsecretaría de Programación Macroeconómica

Source: Dirección Nacional de Programación del Gasto Social - Secretaría de Programación Económica y Regional.

2.2 National off-budget expenditure

 2.2.1 Expenditure by the health security systems regulated by the Administración Nacional del Seguro de Salud (ANSSAL) and other at national level

Data on health security systems corresponding to the period 1980-1988 are a product of a reworking of information extracted from FIEL-CEA (1991) and adjusted according to González García et al. (1987) and Diéguez et al. (1991). For 1989 and 1990, expenditure was estimated on the basis of information available at the DNPGS. Spending for 1991 to 1992 was calculated from the expansion of the revenue of the fund for redistribution of the Sistema Unico de Seguridad Social (SUSS) and estimates from private sources. For the period 1993-1997, spending of the health security systems belonging to the ANSSAL has been estimated on the basis of the revenue of the single contribution to social security (CUSS), to which have been added the transfers of the funds that the ANSSAL redistributes among the health security systems (Fondo Solidario de Redistribución) and the contributions made by retirees and pensioners remaining within their health security systems, applying an expansion coefficient to include the income from co-insurance, sale of services and indebtedness, thus arriving at total expenditure. Outlays by federal health security systems not included under the ANSSAL were also incorporated on the basis of own estimates.

  Lastly, classification by function of the resulting expenditure series was made as follows: for the period 1980-1986 an estimate by González García et al. (1987) was taken as a basis, according to which the outlays were allocated to the health sector and the social benefits included within the social assistance and promotion function (tourism, school uniforms, etc.). For the period 1987-1997 use was made of information provided by the Program for the Reform of Health Security Systems corresponding to a sample of entities surveyed in 1996, adjusting the distribution across the whole period.

  

2.2.2 Spending by the Instituto Nacional de Servicios Sociales para Jubilados y Pensionados (INSSJyP) (Retirees and Pensioners Social Services Institute)

For the period 1980-1988 estimates on INSSJyP spending have been taken from FIEL-CEA (1991). For the period 1989-1994 expenditure has been estimated from SH records of contributions from active workers and retirees, assuming that the Institute has not recorded a deficit in those years.

Since 1995 the INSSJyP has been incorporated to the National Budget and its expenditure is recorded at the "accrued" stage. It should be noted that in the first half of 1995 this institution took charge of the payment of the poverty subsidy (Decree 2627/92) which in this current report has been incorporated to the social security function. An adjustment has thus been necessary.

Health expenditure covers medical benefits and administrative costs. Benefits relating to tourism, nutrition and other benefits of a social nature are included under the social promotion and assistance heading. In the period 1980-1992 these benefits represented a minor percentage of the Institute's total spending. In 1993, following the inclusion of new nutritional programs, this percentage increased. For 1994 and 1995 information was provided by the Accounting Management of the INSSJyP, while for 1996 and 1997 it has been obtained from the SIDIF.

 2.2.3 Expenditure on family allowances

Expenditure on family allowances covers allowances paid to dependent employees in the private sector (for maternity, schooling, children, spouse and large families), benefits paid directly by the ANSeS (on marriage, birth and adoption) and the administrative cost of the system. As from 1997 all allowances are paid by the ANSeS.

Information on family allowances until 1988 has been taken from Hulsberg (1989). For the period 1990-1993 benefits and administrative costs have been estimated on the basis of information provided by the Secretaría de Seguridad Social and the Dirección Nacional de Investigaciones y Análisis Fiscal (DNIAF). Estimates for the period beginning in 1994 have been based on information provided by the latter and by the ANSeS.

It should be noted that allowances paid to federal civil servants and retirees and pensioners have not been taken into account. In the case of the former, allowances are paid directly out of resources allocated in the budget and are incorporated under the headings corresponding to personnel expenses for the various functions. In the case of the latter, family allowances are included in the social security payment order (OPP); as a result the cost of such payments has been included within the social security function.

  

3. Sources and procedures for the calculation of expenditure at provincial and municipal level.

3.1 Expenditure at provincial level

3.1.1 Expenditure included in the budget

Budgetary expenditure by provincial governments includes outlays made by these governments that are financed out of own resources (including central government fiscal transfers) and those provided by the Nation (contributions and specific allocations) and out of public debt.

  For the period 1980-1986 the information used has been taken from the SH, the data for which has been adjusted on the basis of other sources: Consejo Federal de Inversiones (1980-1985) and the World Bank for 6 provinces (1980-1988). As from 1987 two sources have been used. The DNPGS requested information from the provinces on the execution of provincial expenditure classified by purpose and function. All jurisdictions responded, to one extent or another. In addition, the DNCFP holds details of the savings-investment-financing scheme by province, which serves to verify the consistency of the information received. For the years 1993 to 1997 a joint review was performed with the DNCFP which led to a considerable improvement in the information available.

  As can be seen from the following table, 98% of provincial expenditure in 1997 has been determined on the basis of information held by the provinces, while the remaining 2% has been estimated on the basis of pre-existing percentage structures and the classification by purpose of the expenditure.

Origin of Information on Spending at Provincial Level, 1993-1997(*)

in millions of current pesos and percentages

 

Origin of the information

1993

1994

1995

1996

1997

 

millions of $

(%)

millions of $

(%)

millions of $

(%)

millions of $

(%)

millions of $

(%)

Base information exclusively from Provinces

9.559

42

18.647

74

18.885

73

19.653

75

11.817

41

Base information from Provinces w/ estimate of breakdown by functions

8.632

37

2.734

11

5.825

23

5.008

19

14.264

50

Base information from Provinces w/ estimate of breakdown by purpose.

4.495

19

3.937

15

1.004

4

1.689

6

1.959

7

Estimates on the bases of previous percentage structures and the purpose of the expense.

373

2

0

0

0

0

0

0

450

2

Total spending

23.059

100

25.318

100

25.715

100

26.351

100

28.491

100

(*): excluding support to municipalities, health security systems and social security.

 

Expenditure levels for 1998 have been calculated on the basis of information from the consolidated provincial savings-investment scheme. Distribution by purpose and function has been estimated on the basis of the structure of the consolidated expenditure for 1997, except for certain functions where specific criteria have been used (education, housing, public debt). In the case of tertiary level education control was carried out through the transfers by the National Administration.  

Lastly, it should be pointed out that in the case of the Province of Buenos Aires expenditure by the Instituto Provincial de Loterías y Casinos has been excluded, as such spending relates to the payment of prizes for games of chance. Until 1995 this entity consolidated on the provincial budget under the sub-function of public social promotion and assistance.

3.1.2 Provincial off-budget expenditure

3.1.2.1 Spending by provincial social security systems

This heading includes expenditure by the provincial social security systems for the payment of retirement and pension benefits, as well as their corresponding administrative expenses. These systems are financed out of deductions and contributions by working personnel of the provincial and municipal governments.

  For the years from 1980 to 1988 use was made of data from FIEL-CEA (1991). For the period 1989-1993 estimates have been made on the basis of information submitted by the provinces. Calculations for 1994 and subsequent years have been based on information from the DNCFP and the SIDIF. For those cases in which budget data was unavailable, use was made of estimates from an expenditure projection model for provincial pension funds made by the DNCFP and own estimates. It should be noted that expenditure by the funds transferred to the SIJP has been included in the outlays of the National Government.

Because of a lack of information, outlays by social security funds for self-employed professionals could not be included in this study. Contributions to these funds are usually linked to matriculation, being mandatory and exempting contributors from the need to make payments to the SIJP. Funds for independent professionals are regulated by provincial governments.

  

3.1.2.2 Expenditure by provincial health security systems

 

This item covers the total spending of the health security systems of the provinces and the City of Buenos Aires. It includes spending on medical and social benefits and administrative costs. The beneficiaries of these services are workers in activity and retired personnel from the provincial and municipal public sector, their dependents, voluntary participants and those included by virtue of a union agreement.  

Data on spending by the provincial health security systems in the period 1980-1987 has as its source estimates by FIEL-CEA (1991), to which has been added an adjustment for the period 1980-1984 on the basis of information provided by the provinces.

The spending series corresponding to the period 1980-1996 which was shown in previous studies has been revised and corrected. The re-estimation of the series has been based on information taken from the provincial jurisdictions themselves, data on spending on medical services in 1995 and 1996 provided by the Confederación de Obras y Servicios Sociales Provinciales de la República Argentina (COSSPRA), and on information available at the DNPGS. The scope of the information obtained represents approximately 70% of the total spending by entities for the period 1993-1997.  

Health security systems outlays for which no information was available have been estimated on the basis of direct indicators. In some cases, use has been made of the rate of growth of expenditure on personnel applied to health security systems spending, or an estimate has been made on the basis of revenue, calculating payroll taxes on total salaries as an approximation of the cost of the system. Both procedures could lead to an under-estimation of the expenditure incurred through the financing of members, other sources of financing and/or debt, or to an over-estimation such as when the province grants non-remunerative increases to its personnel.  

Medical benefits consist of medical consultations, services provided by sanatoriums and laboratories, providing of medicines and dental care, which represent only part of the expenditure of these entities. For this reason it has been necessary to expand expenditure estimates to include spending on social benefits (economic subsidies, tourism, travel costs and per diem allowances, etc.) and on administrative costs. Data from COSSPRA and other key informants was used to make an estimate of administrative costs and social benefits.

  

3.2 Expenditure at municipal level

  Estimates of total expenditure by municipal governments until 1988 have taken FIEL-CEA (1991) as their source. Data for the period 1989-1992 has been calculated on the basis of the contributions that the municipalities receive from the provinces (support for municipal governments) and various assumptions on the volume of own resources and their deficits. Data for 1993 onward derives from estimates made by DNCFP in the context of the Updating of the National Accounts System Component – IDB Project 826/OC/AR, and on the basis of information provided by the municipalities themselves, the functional breakdown of which has been grouped together so as to continue with the development of the series prior to 1993 that had been published previously. However, for this new version it has been decided to disclose separately spending on public debt services which until 1988 had been included in the other urban services function, and which from 1989 to 1992 was included under other spending on economic services. It should be noted that this information is subject to review.

4. Classification criteria for consolidated public expenditure

  Throughout the report CPE is disclosed classified on the basis of the following criteria:

 - Level of government (Nation, provinces and CBA and municipalities): As indicated previously, expenditure has been recorded against the level of government executing the expenditure and not the level that finances it.

In the specific instance of PSE, the following classification criteria have been adopted:

- Social insurance and social sectors : Outlays for social insurance include social security and health security systems costs (the latter included under the functions of health care and social promotion and assistance) unemployment insurance and family allowances (under the labor function). Social sectors spending include education, culture and science and technology, public medical services (health function), water and sanitary services, housing, public social promotion and assistance, employment schemes (labor function) and other urban services.

- Fiscal social expenditure: This is the net mass of resources spent on social sectors and social insurance, calculated by subtracting all deductions and contributions from gross expenditure, taking into account only those programs financed out of treasury resources.

5. Measurements and the use of deflators

 5.1 Series as a percentage of GDP

  For the series shown as a percentage of GDP the information used refers to the calculation at market prices in current pesos provided by the SSPM, corresponding to the revision of the National Accounts, which has made it possible to incorporate informal sectors and new activities. The series show the relationship between spending in current pesos and product in current pesos. The GDP series that has been used is shown below.

 Gross Domestic Product

at market prices

Year

Thousands of pesos

1980

3,84

1981

7,47

1982

21,85

1983

109,50

1984

790,92

1985

5.305,04

1986

9.984,08

1987

23.332,34

1988

111.062,23

1989

3.244.045,20

1990

68.922.274,00

1991

180.897.972,00

1992

226.847.000,00

1993

257.569.808,00

1994

281.645.386,00

1995

279.543.000,00

1996

297.359.000,00

1997

323.386.251,33

Source: SSPM – Secretaría de Programación Económica y Regional

  

5.2 Series in constant values

  Because of the strong inflation that took place, mainly in the 80s, series in current values make it extremely difficult to carry out a follow-up of the evolution of spending over the years covered by this report. As a result, it has been decided to also show the series in 1997 pesos.

  To obtain these series current values have been corrected using a combined price index composed in equal parts by the general level wholesale price index and the consumer price index, both of which have been provided by the INDEC. To perform the combination, the original series were transformed into indexes with a 1997 base year, and a simple average was calculated using the two indexes.

  This price indicator may not be appropriate for all uses, as the period was noted for sharp fluctuations in relative prices. In such cases the presentation of the attached tables in current values enables corrections to be made using the index considered most appropriate for the analysis. It should be borne in mind that when totaling outlays by the governments of the various provinces, it would have been more correct to have deflated this spending by taking as a base the price indexes for each provincial jurisdiction. However, this has not been possible as not all provinces have this information available.  

An additional difficulty arises from the fact that the values of the outlays are annual totals, and have therefore had to be corrected by the annual average indexes.

Table of deflators

Annual price indexes

Base 1997 = 1

 YearConsumer general level

Combined (*)

1980

0,0000000196

0,0000000122

0,0000000159

1981

0,0000000411

0,0000000249

0,0000000330

1982

0,0000001464

0,0000000660

0,0000001062

1983

0,0000006747

0,0000002929

0,0000004838

1984

0,0000045552

0,0000021285

0,0000033419

1985

0,0000347506

0,0000164358

0,0000255932

1986

0,0000569437

0,0000312430

0,0000440933

1987

0,0001269126

0,0000722706

0,0000995916

1988

0,0006504669

0,0003201535

0,0004853102

1989

0,0229780688

0,0101789657

0,0165785173

1990

0,3922190848

0,2457165742

0,3189678295

1991

0,8255249077

0,6675423850

0,7465336463

1992

0,8750035104

0,8337600957

0,8543818030

1993

0,8890457200

0,9222346793

0,9056401997

1994

0,8948959209

0,9607594880

0,9278277044

1995

0,9642927729

0,9931956947

0,9787442338

1996

0,9989976308

0,9947419054

0,9968697681

1997

1,0000000000

1,0000000000

1,0000000000

(*) simple average of wholesale and consumer indexes

Source: Based on details published by INDEC

  

5.3 Population

  For the purpose of calculating values for per capita GDP and public expenditure for each year in the period, use has been made of the population projections by the INDEC-CELADE (1995) and INDEC (1995).

  

Total estimated population for Argentina by calendar year, 1980-1997

Year

Estimated Population

1980

28,093,507

1981

28,524,921

1982

28,965,534

1983

29,411,586

1984

29,859,318

1985

30,304,970

1986

30,748,405

1987

31,192,129

1988

31,636,348

1989

32,081,268

1990

32,527,095

1991

32,973,784

1992

33,421,199

1993

33,869,405

1994

34,318,469

1995

34,768,456

1996

35,219,612

1997

35,671,894

Source: INDEC-CELADE (1995)

Total Estimated Population by Province by Calendar Year, 1993-1997.

Province

Year

1993

1994

1995

1996

1997

Federal Capital

2.991.271

2.989.539

2.988.006

2.986.751

2.985.428

Buenos Aires

13.036.513

13.184.446

13.333.670

13.484.199

13.634.681

Catamarca

277.188

282.336

287.566

292.880

298.246

Chaco

869.539

880.090

890.548

900.901

911.091

Chubut

378.722

387.736

396.800

405.941

415.163

Córdoba

2.856.569

2.885.722

2.914.972

2.944.336

2.973.533

Corrientes

828.860

840.771

852.686

864.596

876.423

Entre Ríos

1.047.401

1.055.423

1.063.416

1.071.361

1.079.142

Formosa

423.593

433.916

444.367

454.935

465.595

Jujuy

534.352

543.016

551.804

560.715

569.706

La Pampa

271.852

276.379

280.876

285.356

289.815

La Rioja

234.535

240.286

246.158

252.145

258.231

Mendoza

1.464.537

1.482.672

1.500.818

1.518.956

1.536.986

Misiones

837.812

857.746

877.904

898.276

918.797

Neuquén

426.142

443.036

460.395

478.240

496.567

Río Negro

534.294

545.529

556.674

567.666

578.536

Salta

913.409

932.597

952.174

972.143

992.374

San Juan

542.285

546.504

550.641

554.698

558.647

San Luis

304.929

312.481

320.109

327.829

335.637

Santa Cruz

170.784

175.421

180.116

184.871

189.688

Santa Fe

2.881.832

2.907.859

2.934.220

2.960.895

2.987.522

Santiago del Estero

687.146

691.606

696.092

700.592

705.009

Tierra del Fuego

82.399

89.296

96.917

105.225

114.143

Tucumán

1.181.830

1.195.764

1.209.716

1.223.688

1.237.629

Source: INDEC (1995)

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