ARGENTINA

Argentina is a federal representative republic, divided into 23 provinces and the federal capital of Buenos Aires. According to the 1853 Constitution (last revised in 1994), the President is both the head of state and the head of government and is elected for a 4-year term by direct and universal suffrage. The legislative power is vested in a Congress (Congreso Nacional) composed of two chambers: the House of Deputies (C‡mara de Diputados de la Naci—n) and the Senate (Senado de la Naci—n). The House of Deputies is composed of representatives directly elected for a 4-year term by a system of proportional representation. The Senate is composed of three senators from each province, and three from the Capital City of Buenos Aires (Ciudad Autonoma de Buenos Aires), elected for six years. The Senate is presided by the Vice-President of the Republic, elected at the same time as the President for a 4-year term.

ArgentinaÕs subnational level of government is two-tiered, divided between provinces and local governments. The federal constitution establishes the legal basis for local government autonomy for provinces and municipalities. In addition, municipal autonomy is recognised at the provincial level in each provincial constitution. The federal constitution also gives the City of Buenos Aires the right to an autonomous government.

At the provincial level, most provinces pre-date the May Revolution of 1810 and the nationÕs founding, and their borders were defined through interprovincial agreements signed before the Constitution of 1853. That year, thirteen provinces (Catamarca, C—rdoba, Corrientes, Entre R’os, Jujuy, La Rioja, Mendoza, Salta, San Juan, San Luis, Santa Fe, Santiago del Estero and Tucum‡n) met in a congress in the city of Santa Fe to constitute the Argentine Republic. Historically, they have enjoyed significant autonomy. Provincial governments each have their own executive, legislative and judicial powers. The executive branch is led by the governor, elected according to each provinceÕs electoral system (representative, proportional, or majority). Legislative power is vested in a bicameral provincial congress in eight provinces, comprising an upper chamber and a lower chamber, and a unicameral congress in the remaining 15 provinces and in the Capital City of Buenos Aires. Each province enacts its own constitution, as stated in Section 5 of the Federal Constitution of 1853. Inter-jurisdictional relations between the federal and provincial governments are facilitated through Federal Councils in several sectors (Federal Investments Council, Federal Taxes Council, Federal Councils on Education, etc.).

The scope of local government autonomy is largely determined at the provincial level. Each provincial constitution establishes differentiated attributions and organisational structures for local governments, as well as financial arrangements, through enacting Organic Laws of Municipalities. Executive power at the local level is generally exercised by an intendant, elected by direct suffrage for two or four years, and legislative power is vested in a council whose number of members is set according to legal prescriptions depending on the province. However, in some provinces, small local governments are governed by a single body, which holds both the executive and legislative functions. Larger municipalities are authorised to enact their own Organic Charter of Municipalities (Carta Org‡nica Municipal) subject to additional criteria, such as the existence of urban areas and a population threshold of up to 30 000 inhabitants. As of 2020, approximately 190 municipalities had their own Organic Charters, established according to guidelines set in the constitution of the relevant province.

TERRITORIAL ORGANISATION
MUNICIPAL LEVEL	INTERMEDIATE LEVEL	PROVINCIAL LEVEL	TOTAL NUMBER OF SNGs (2021)
2 311 Local governments (Gobiernos locales)		23 Provinces (Provincias) + 1 The Autonomous City of Buenos Aires (CABA)
Average municipal size: 19 058 inhabitants
2 311		24	2 335

OVERALL DESCRIPTION: Argentina is a federal republic with 23 provinces (Provincias) plus the Autonomous City of Buenos Aires (Ciudad Aut—noma de Buenos Aires). Provinces are subdivided into 2 311 autonomous local governments.

For statistical purposes, Argentina is also divided into six regional areas: Metropolitana, Cuyana, Noroeste, Noreste, Pampeana and Patag—nica.

PROVINCIAL LEVEL: The provincial level of government is composed of 23 provinces (provincias) and the Autonomous City of Buenos Aires. The largest province is the Province of Buenos Aires (307 571 km²) whereas the smallest one is Tucuman, which extends over just 29 801 km².

The Autonomous City of Buenos Aires (CABA) has a system of government similar to those of provinces, with its own powers of legislation and jurisdiction, and a directly-elected mayor. However, unlike the provinces, which enact and legally structure their constituent municipalities, federal law has restricted the power of Buenos Aires over its jurisdictions and limits its involvement in a number of sectors, including security and police, urban transport and service provision.

MUNICIPAL LEVEL: At the local level, the form of local government varies according to each province. As of 2021, it included 1 179 municipalities (municipios), and 1 132 other types of local governments, including communes (comunas), development commissions (comisiones de fomento), municipal commissions (comisiones municipales), rural communes (comunas rurales), neighbourhood councils (juntas vecinales) and autonomous government councils (juntas de gobierno autonomas). Each category differs in its degree of autonomy. In addition, municipalities are divided into municipalities with organic charters, and municipalities without organic charters.

Provinces may be composed of a combination of these six types of local government, without a hierarchical relationship. The form of local government is based on the size of the population, but it can also be related to the number of registered voters, to the existence of an urban centre, etc. The average number of local governments per province in Argentina is 91. In most provinces, the minimum threshold for establishing a municipality is 500 inhabitants, but this limit can vary and be set as high as 10 000 inhabitants (e.g. Santa Fe). Other forms of local governments do not have a minimum threshold but rather maximum thresholds, which can rise up to 10 000 inhabitants. Consequently, the local government level may be very fragmented.

There also exists a sub-municipal level of government, made of rural communes in the provinces of Chubut and Tucuman. In Chubut, each rural commune has a neighbourhood board chaired by the elected president of the rural commune, who is in charge of its government and administration. In Tucuman, rural communes designate communities with at least 500 inhabitants, but which do not belong the category of municipality. The CABA also has a sub-municipal level, composed of 15 communes (comunas) subdivided into 48 neighbourhoods (barrios).

ArgentinaÕs territorial organisation is far from homogenous, with striking disparities in size and economic activities within and across provinces and local governments. The level of fragmentation at the municipal level is still smaller than in most federations and quasi-federations within the OECD, when looking at the average number of inhabitants per municipality (10 180 inhabitants on average in OECD federal and quasi-federal countries). Approximately 80% of local governments have less than 10 000 inhabitants, while only two municipalities (Buenos Aires and Cordoba) have populations above 1 million.

HORIZONTAL COOPERATION: Inter-municipal cooperation arrangements depend heavily on each provinceÕs constitution, which include varying degrees of incentives for horizontal coordination. In some cases, public service delivery (mainly electricity, gas and water) is managed through service cooperatives (cooperativas), which provide a community-based response in sparsely populated remote areas. For instance, the Federation of Electricity and Public Services Cooperatives of the Province of Buenos Aires (FEDECOBA) reaches 500 000 electricity services users and 150 000 water services users. On the other hand, Òurban agreementsÓ (convenios urbanisticos) can also be promoted to support inter-municipal cooperation in service delivery along urban corridors near metropolitan areas.

STATE TERRITORIAL ADMINISTRATION: There are also deconcentrated units of the federal government at the territorial level, called ÒdepartmentsÓ. Departments share the same status as local governments. Out of the total of 529 departments, there are 135 ÒpartidosÓ that make up the Province of Buenos Aires, 15 communes that make up the Autonomous City of Buenos Aires and 379 departments that are distributed among the different provinces of the country. In four provinces (Buenos Aires, La Rioja, Mendoza and San Juan, as well as in CABA), the departments have the same status as local governments, with their own executive authorities or assemblies.

Local governments can extend across department boundaries, and in 13 provinces, some areas of the territory are not covered by local governments. On the other hand, departments cover the whole territory and are mutually exclusive.

The provinces are responsible for all the powers not delegated to the Federal Government by the National Constitution, as well as those powers expressly reserved to them by special pacts at the time of their incorporation. Provinces have both exclusive competences and shared competences with the federal state. Provinces have the power to create regions for socio-economic development or specific bodies to exercise provincial responsibilities and they may, upon approval by the National Congress, ratify international agreements, as long as these agreements do not conflict with ArgentinaÕs foreign policy. Provincial governments also own and manage the natural resources within their jurisdiction. Overall, however, there is a lack of formal guidance regarding responsibilities for territorial development, and the federal framework does not require subnational governments to design or implement formal territorial development strategies.

Provincial governments have exclusive competences encompassing electricity, primary, secondary education and vocational training, and interprovincial roads. They also have shared competences, including some of the remaining aspects of education, justice, police and penitential services, health and social assistance, economic promotion and public transport, housing, energy and environmental matters. These responsibilities are generally spread across the three levels of government, and may be shared also with the private sector (e.g. public transport, internet services, hospitals). For instance, education was devolved from the federal government to provinces and to the CABA in 1993 (except for tertiary education), under the coordination of the Federal Council for Education established by law in 2006, which works jointly with Provincial Councils for Education Policy. The law on Education Financing (Law No.26075 of 2010) demonstrated further efforts to consolidate education service delivery among government tiers.

The competences assigned to local governments vary across provinces and depend on each provincial constitution. Since ArgentinaÕs financial crisis in 2001, municipal functions have expanded, and there is an increasing effort to coordinate with higher levels of government in service delivery. Municipal competences vary widely depending on municipal size, and municipalities with high population density can be assigned significant budgetary and financial responsibility towards public service delivery (e.g. school maintenance and healthcare services). Municipal authorities share responsibilities with both provincial governments (e.g. primary education, primary healthcare, water and sanitation, regional roads construction and maintenance) and with the federal government (e.g. economic development, tourism and health prevention). Despite the large array of devolved responsibilities, however, municipal governments in non-resource rich regions often lack the capacity to implement the responsibility assigned to them by provincial and federal authorities due to a lack of adequate human resources.

Main responsibility sectors and sub-sectors
SECTORS AND SUB-SECTORS	Provincial level	Municipal level
1. General public services (administration)	Administration of all provincial services; Coordination and oversight of municipal governments	Regulation and control of local activities, including regulation of land use in accordance with provincial laws, business licenses
2. Public order and safety	Fire protection (shared); Justice and police (shared)	Assistance of population at risk; Fire protection (shared)
3. Economic affairs / transports	Economic promotion; Clusters development; Promotion and financing of economic services; Electricity; Interprovincial roads; Public transport (shared)	Urban planning; Land zoning; Urban infrastructure; Road construction and maintenance; Markets and cemeteries; Public transport and regulation of public roads; Tourism; Management of heritage and historical sites (shared)
4. Environment protection	Natural resources management; Sewerage (shared)	Public squares and green areas; Waste management; Regulation of pollution; Sewerage (shared)
5. Housing and community amenities	Water management (shared)	Street lightning; Water management (shared)
6. Health	Healthcare (shared)	Primary healthcare (shared); Health prevention (shared)
7. Culture & Recreation		Sport
8. Education	Secondary education, including vocational education and technical training; Tertiary education (shared)	Primary education
9. Social Welfare	Unemployment subsidies (shared)	Unemployment subsidies (shared)

Scope of fiscal data: Provinces and the Capital City of Buenos Aires at the provincial level, and municipalities and other forms of local governments at the local level.

Ministerio de Economia

Availability of fiscal data: Medium

Quality/reliability of fiscal data: Medium

GENERAL INTRODUCTION: Argentina is one of the most decentralised countries on the American continent. Subnational governments are heavily involved in the design and implementation of public policies and the provision of public services. In addition to Article 14 of the Federal Constitution, law no. 23 458 of 1988 and the 2017 Fiscal Responsibility Law both regulate intergovernmental fiscal relations between and among the provinces, the municipalities and the federal government. The local legislative council oversees all local government acts including the budgetary planning process, which is then overseen by the Audit office at the provincial level. The federal secretariat of municipal affairs also oversees the work of the municipalities.

Subnational government revenue generally encompasses own-source taxes, fiscal transfers from the federal government, and royalties on natural resources. However, ArgentinaÕs level of revenue decentralisation is much lower than that of expenditure decentralisation, and the fiscal asymmetries in revenues and expenditure across municipalities add to the challenges of horizontal imbalances, due to regional disparities. Tax collection is highly concentrated at the federal level, and the economic and social disparities across provinces make assigning taxing powers to subnational governments a major challenge. Hence, subnational governments remain highly reliant on fiscal transfers to carry out their spending obligations, and provincial governments resort to borrowing.

In 2017, a Fiscal Consensus was ratified by Argentinian provinces (except for San Luis) with the intention of harmonising the tax structures among different jurisdictions. In the following years, and as the adverse economic circumstances deepened, new Fiscal Consensuses were signed (2018, 2019 and 2020), introducing a series of modifications, suspensions and eliminations to the commitments initially assumed. On 10 June 2021, the Chamber of Deputies signed into law the Fiscal Consensus 2020, which authorised to extend the suspension of the commitments assumed in the Fiscal Consensus III of 2017 and other measures related to the activity of financial intermediation until 31 December 2021, including the adequacy of the collection regimes, the mechanisms of automatic refund, compensation or transfer of credits and of the automobile tax.

Subnational, state and local government expenditure by economic classification
2020	Dollars PPP / inhabitant			% GDP			% general government			% subnational, state and local government
-	SNG	State	Local	SNG	State	Local	SNG	State	Local	SNG	State	Local
Total expenditure	4 355	3 644	711	21.0%	17.6%	3.4%	48.7%	40.7%	8.0%	100%	100%	100%
Inc. current expenditure	3 989	3 331	658	19.2%	16.0%	3.2%	47.7%	39.8%	7.9%	91.6%	91.4%	92.6%
Compensation of employees	2 044	1 633	411	9.8%	7.9%	1.9%	94.3%	75.3%	19.0%	37.5%	44.8%	-
Intermediate consumption	516	320	195	2.5%	1.5%	1.0%	-	-	-	7.4%	8.8%	-
Social expenditure	479	479	0	2.3%	2.3%	0.0%	-	-	-	11.0%	13.2%	-
Subsidies and current transfers	841	792	49	4.1%	3.8%	0.3%	-	-	-	18.2%	21.8%	-
Financial charges	109	106	3	0.5%	0.5%	0.0%	-	-	-	2.4%	2.9%	-
Others	0	0	0	0.0%	0.0%	0.0%	-	-	-	0.0%	0.0%	-
Incl. capital expenditure	366	313	53	1.8%	1.5%	0.3%	63.8%	54.6%	9.2%	8.4%	8.6%	7.4%
Capital transfers	118	69	49	0.6%	0.3%	0.3%	50.9%	29.9%	21.0%	2.7%	1.9%	6.8%
Direct investment (or GFCF)	248	244	4	1.2%	1.2%	0.0%	72.6%	71.3%	1.3%	5.7%	6.7%	0.6%

EXPENDITURE: In 2020, subnational government expenditure in Argentina represented 21% of GDP and 48.7% of public expenditure, above the OECD average for federal countries (20.6% of GDP and 43.5% of public expenditure in 2020).

In Argentina, subnational governments are major employers, with staff expenditure representing more than 94.3% of public staff expenditure and 37.5% of total subnational government expenditure in 2020. Among other current expenditure lines, subsidies and transfers came in second and reached 18.2% of total subnational government expenditure. In particular, state government expenditure accounted for 40.7% of total public expenditure and 17.6% of GDP, while municipal spending only stood at 8% of public expenditure and 3.4% of GDP in 2020. Capital expenditure represented 8.4% of subnational expenditure in 2020 (5.7% for direct investment) and is mainly done by the provinces, which are responsible for 85.6% of subnational government capital expenditure.

DIRECT INVESTMENT: In Argentina, subnational government investment represents the bulk of total public investment, carrying out 72.6% of total public investment in 2020. The majority of investment is carried out by provinces, which accounted for 71.3% of total public investment in 2020, in comparison to municipalities (1.3%).

There has been a decrease in subnational government investment in recent years, as the share of subnational government investment in total public investment expenditure fell by 3.5 percentage points in 2020 in comparison with 2016. In the energy sector, which represents a large sector in Argentina, the central government has control over prices and quotas of biofuels and is discouraging investment in several provinces (e.g. C—rdoba). Provinces also lack comprehensive infrastructure plans and regional development strategies aligned with national infrastructure policies, as well as co-ordination with local authorities. The room for manoeuvre to invest, particularly in infrastructure, is particularly reduced by high operating costs (public sector salaries, pensions, interest payments) and limited access to external financing sources. Most municipalities have little or no power regarding major infrastructure work undertaken by national agencies in their jurisdictions.

Subnational governments can use public private partnerships (PPPs) to finance investment. A new law, approved in November 2016, established a new legal framework for PPPs, seeking essentially to allow a balanced and predictable collaboration between the public and private sectors. The law also provides a broad definition of PPP, which is not circumscribed to infrastructure projects or to a certain type of contract (e.g. construction, supply, maintenance, management and/or operation of projects are included) and allows provinces and municipalities to sign PPP contracts.

Subnational, state and local government expenditure by functional classification
2020	Dollars PPP / inhabitant			% GDP			% general government			% subnational, state and local government
-	SNG	State	Local	SNG	State	Local	SNG	State	Local	SNG	State	Local
Total expenditure by economic function	4 355	3 644	711	21.0%	17.5%	3.4%	-	-	-	100%	100%	100%
1. General public services	988	811	177	4.8%	3.9%	0.9%	86.2%	72.2%	14.0%	25.1%	25.0%	25.2%
2. Defence	0	0	0	0.0%	0.0%	0.0%	-	-	-	-	-	-
3. Security and public order	362	354	8	1.7%	1.7%	0.0%	72.0%	70.4%	1.6%	8.3%	1.1%	9.7%
4. Economic affairs/transports	394	341	53	1.9%	1.6%	0.3%	29.0%	23.6%	5.4%	6.6%	7.5%	6.4%
5. Environmental protection	52	26	26	0.2%	0.1%	0.1%	46.6%	23.2%	23.5%	1.2%	3.7%	0.7%
6. Housing and community amenities	349	99	250	1.7%	0.5%	1.2%	-	-	-	8.0%	35.2%	2.7%
7. Health	503	414	89	2.4%	2.0%	0.4%	37.5%	30.9%	6.6%	11.6%	12.5%	11.4%
8. Recreation, culture and religion	0	0	0	0.0%	0.0%	0.0%	-	-	-	-	-	-
9. Education	983	944	39	4.7%	4.5%	0.2%	91.3%	87.6%	3.6%	22.6%	5.5%	25.9%
10. Social protection	722	654	68	3.5%	3.2%	0.3%	21.7%	19.7%	2.0%	16.6%	9.5%	18.0%

Since ArgentinaÕs financial crisis in 2001, municipalities in several provinces have undertaken spending related to environmental conservation, economic and social programmes, as well as implementing policies in favour of minority groups. However, the bulk of spending is carried out at the provincial level.

Key expenditure area at the provincial level in 2020 include education (4.5% of GDP and 87.6% of total education spending), general public services (3.9% of GDP and 72.2% of total general government expenditure in this sector), as well as social assistance (3.2% of GDP and 19.7% of total social protection expenditure) and health (2.0% of GDP and 30.9% of total healthcare expenditure). The COVID-19 pandemic caused a major increase in subnational healthcare spending, which increased by 39% between 2019 and 2020 in nominal terms (with inflation being at 36%).

Economic infrastructure, social insurance/poverty-related spending are jointly borne by the federal and provincial governments, and provinces and the CABA are primarily responsible for financing road construction and maintenance, as well as the purchase of equipment for investments in railway and other infrastructure projects.

Subnational, state and local government revenue by category
2020	Dollars PPP / inhabitant			% GDP			% general government			% subnational, state and local government
-	SNG	State	Local	SNG	State	Local	SNG	State	Local	SNG	State	Local
Total revenue	-	3 593	-	-	17.3%	-	-	43.7%	-	-	100%	-
Tax revenue	-	2 728	-	-	13.1%	-	-	56.1%	-	-	75.9%	-
Grants and subsidies	-	282	-	-	1.4%	-	-	-	-	-	7.9%	-
Tariffs and fees	-	17	-	-	0.1%	-	-	-	-	-	0.5%	-
Income from assets	-	38	-	-	0.2%	-	-	-	-	-	1.0%	-
Other revenues	-	528	-	-	2.5%	-	-	-	-	-	14.7%	-

OVERALL DESCRIPTION: Subnational government revenue sources include taxes, intergovernmental transfers from the federal government, tariffs and fees, property income and some other small revenue sources. According to existing legislation, provincial governments are the only level of government allowed to directly tax its residents. Indirect taxes can be set either by the federal government or by provincial authorities. The federal government has retained the exclusive right to tax foreign trade. However, the federal government can constitutionally set direct taxes under Òspecial circumstancesÓ. Initially, during the 19^th and the beginning of the 20^th century, the federal government mainly focused on raising taxes on international trade. The Great Depression (1929-1930) induced a sharp decrease in federal revenues, leading the federal government to evoke Òspecial circumstancesÓ and to start collecting taxes previously assigned to the provinces. At the same time, provinces had to delegate to the federal government the administration of some of the most essential taxes (including personal and corporate income tax, consumption tax and wealth taxes). This delegation persists today. Provinces also collected revenues from natural resource exploitation (e.g. royalties, specific taxes and tariffs).

Other main sources of revenue for subnational governments are the transfers by Federal Co-participation of the countryÕs revenue, as well as the collection of municipal taxes. Co-participation consists in a portion of the tax funds collected by the national government being distributed among the provinces in real time. That is, as it is collected daily, the central administration makes automatic transfers to the provinces. The purpose of the scheme, which has constitutional status, is to distribute tax revenues among the provinces, given the transfer of tax collection powers from these to the national government, with the aim of avoiding double taxation. Therefore, in practice, not all jurisdictions contribute the same to the Treasury, nor do they receive the same proportion of what they contribute to the economy.

At the municipal level, revenues are also derived from fees for the provision of services. Provinces can grant fiscal taxation power to their municipalities, although these are very limited and depend on the category of municipality and the provinceÕs tax-sharing laws. In some provinces, local governments are limited to tax vehicles and urban properties.

In 2020, provincial revenue accounted for 43.7% of total public revenue, more than 6 percentage points higher than in 2016 (fiscal income data at the municipal level is not public since 2017). Provincial tax revenue represented the largest share and stood at 75.9% of total provincial revenue, 56.1% of total public tax revenue and 13.1% of GDP.

TAX REVENUE: Tax revenues represented the bulk of provincial revenue in 2020, accounting for more than three quarters of total provincial government revenues and more than half of total tax revenue. This is explained by the fact that in the Argentinian accounting system the tax revenue category comprises both exclusive and shared taxes determined under a co-participation system, which represent almost half of subnational government tax revenue. Municipalities in general have very limited taxing powers, and only a small number of municipalities (C—rdoba, Chaco, Chubut, Formosa, and Salta) are allowed to collect taxes. These taxes are mostly related to municipal services, vehicles, business and environmental tax, and property tax.

The tax system is complex, with more than 165 taxes in 2020, according to the Argentine Institute of Fiscal Analysis (Instituto Argentino de An‡lisis Fiscal) and a complicated system of cross-exemptions. Indirect taxes are under the domain of national and provincial authorities, and provinces have the monopoly to set direct taxes on their respective populations (the federal government can set direct taxes under special circumstances). While the taxes applied are very similar across provinces, their shares in provincial tax revenues vary based on a number of criteria (e.g. population, business density, size of urban centres, etc.).

At the end of 2017, the federal government, the provinces (with the exception of San Luis) and CABA, signed the so-called Fiscal Consensus III, with the aim of establishing a series of guidelines to harmonize the tax structures of the different jurisdictions in such a way as to promote employment, investment and economic growth, and promote uniform policies that make it possible to achieve this common goal. In December 2018, another set of laws was passed Ð by consensus between the federal and certain provincial governments Ð including a number of tax provisions (no. 27 467 and no. 27 469). Upon ratification at the provincial level, the agreement would postpone the reduction of the provincial stamp tax for an additional year. The national government and the provincial governments signed in the last week of the year 2021 the fiscal consensus for 2022, declaring that this new agreement will allow increasing the autonomy of the provinces and balancing the fiscal system in the Argentine territory. The "new" Fiscal Consensus interrupts the requirement to reduce the tax burden signed in 2018 and enables the provinces to raise and create new taxes. It also enables the reinstatement of some local taxes such as the inheritance tax, and provides for the promotion of further dialogue, a comprehensive federal tax simplification and coordination program, the strengthening of the Single Tax Registry (Registro Unico Tributario, RUT), and maximum rates for the Gross Income Tax and the Stamp Tax.

The primary source of tax revenue for provinces comes from their share of sales tax, which accounted for 29 % of provinces tax revenue in 2020 (3.8% of GDP). Provincial revenues from shared taxes also include a part of the income tax (of which 4% of income tax revenues are allocated to the provinces and an additional share is allocated to the Province of Buenos Aires), 6.3% of the tax on personal goods (1% of GDP and 7.9% of provinces tax revenue), and revenue from natural gas taxes. Besides, the own taxes of provinces include the property tax (3.1% of provincial tax revenue and 0.4% of GDP), gross income tax (29.1% of provincial tax revenue and 3.8% of GDP), tax on motor vehicles (2.1% of provincial tax revenue and 0.3% of GDP) and stamp and gift taxes (2.9% of provincial tax revenue and 0.4% of GDP).

The reliance of Argentinian provinces on a tax on gross sales (Impuesto a las Actividades Lucrativas) is longstanding. With the introduction of a VAT in 1975, provinces agreed to remove the sales tax and receive a share of the VAT revenues collected by the federal government. The gross sales tax at the provincial level was however reintroduced with a different name (Ingresos Brutos) in the 1980s when provincial authorities ran up sizeable deficits. In the 1990s, the federal government initiated new fiscal agreements with the provinces with the objective of reducing the gross sales tax. Provinces agreed to exempt primary activities, manufacturing, construction and financial services from the tax, yet they did not all comply with these agreements. In addition, while fiscal agreements were abandoned in the 2000s, provincial authorities resumed their collections on previously exempted sectors. While some provinces have reduced their rates for small firms or provided fiscal incentives for industrialisation, substantial differences in tax rates for similar economic activities across provinces, especially in the manufacturing sector, remain. Furthermore, regional and local authorities often impose extra requirements on firms from other provinces. In the province of Buenos Aires, out-of-province manufacturers have a rate of 3% compared with 0.57% for in-province manufacturers; in C—rdoba, the difference is 3.5% compared to 0.46%. Withholding regimes are also very different across the provinces (more than 60 different regimes). The Convenio Multilateral signed by the provinces is the mechanism used to distribute collections from large taxpayers with sales in more than one jurisdiction among the provinces.

Each province and most local governments have their own tax administration department or agency (either centralised or decentralised). Some provinces agree to share information with the federal tax agency, but there are no joint audits. The operation and degree of administrative autonomy may differ significantly. For instance, in some provinces the tax authorities are organised as independent offices deciding on their own budget and reporting to the Provincial Ministry of Finance or Economy while others are administrative branches or provincial Directorates, as in Santa Fe and Mendoza, under the corresponding unit of the Ministry of Economy or Finance.

GRANTS AND SUBSIDIES: Intergovernmental transfer agreements between the federal government and the 23 provinces and Capital City of Buenos Aires are regulated according to the 1988 Law no. 25 548 of Co-participation (Coparticipaci—n Federal de Impuestos), as amended in 2002. This law established an equalisation scheme between the federal and provincial level, funded through the withholding of a specified percentage of provincial tax revenues (64% of the income tax, 89% of VAT revenue, 93.7% of taxes on personal goods, 30% of tax on financial transactions and 30% of the self-employment tax). In addition, national level block grants are used to finance provincial funds (e.g. Energy Fund, Housing Fund, Road Fund).

As of 2020, transfers represented 7.9% of provinces total revenue, and 1.4% of GDP. Overall, 89% of grants from the federal government are current, versus 11% of capital grants.

Law no. 25 548 sets the percentages of funding allocated to each province, although it does not specify the shares to be transferred to the municipalities. According to the Co-Participation Law, and with very few exceptions (e.g., taxes on international trade), taxes collected by the federal government form a common pool (Masa Coparticipable). The primary distribution of this common pool is set as follows: 42.3% to the federal government, 54.7% to be shared among all provinces, and 2% to be divided among certain provinces to compensate for losses caused by prior co-participation arrangements (1.57% to Buenos Aires, 0.14% to Chubut, 0.14% to NeuquŽn, 0.14% to Santa Cruz). The remaining 1% makes up a special fund dedicated to provinces facing unforeseen contingencies (Fondo de Aportes del Tesoro Nacional). From the part of the common pool assigned to all provinces, each of them receives a fixed share set by the law. Each province determines the composition and distribution of these revenues to the municipalities based on provincial disposable revenues. In 2016, transfers to the municipalities represented 17% of their total revenues. Until 2015, 15% of total tax revenues subject to the co-participation regime were withheld by the government to fund the social security system. In 2015, this agreement was repealed for the provinces of C—rdoba, San Luis and Santa Fe, and the federal government had to return the funds. Besides, the Joint Federal Fund (Fondo Federal Solidario), created in 2009 as part of the Co-Participation Law and financed by 30% of taxation of soy exports, allocated funds for infrastructure expenditure to provinces and municipalities.

Unlike tax sharing or equalisation mechanisms in other countries, the equalisation coefficients are related neither to observable exogenous provincial characteristics (geographic, demographic, socio economic) nor to provincial expenditure needs or plans. There are no limits on the absolute amount of resources that a province can receive or on the share of its revenues that can come from the federal government. Besides, any agreement to amend the formula and reassign funds from one province to another requires unanimity among all parties involved, which has proven difficult to achieve so far.

OTHER REVENUE: Other revenue sources differ from one municipality to another and depend on provincial regulations. More generally, they include property rents, business licenses or user fees and charges collected on public services including lighting, sanitation services, safety and hygiene, building permits, street cleaning, etc.

In addition, resource-rich provinces also receive significant amounts of funding from royalties from natural resource exploitation (e.g. mining, electricity, crude oil and natural gas). The rates on natural resource exploitation vary across provinces, which agreed on different rates in bilateral negotiations with private firms in order to grant concessions. The regime of royalty payments is determined by the 1967 law no.17319, which establishes standard procedures for revenue mobilisation on natural resources, and is applicable to all provinces. However, this source of revenue is highly volatile, and subject to change in international prices. In some cases, royalties are collected by federal authorities and then transferred to the provincial units where the production takes place according to the devolution criteria.

Subnational, state and local government fiscal rules and debt
2020	Dollars PPP / inh.			% GDP			% general government debt			% SNG debt			% SNG financial debt
-	SNG	State	Local	SNG	State	Local	SNG	State	Local	SNG	State	Local	SNG	State	Local
Total outstanding debt	-	126	-	-	0.6%	-	-	8.3%	-	-	100%	-	-	-	-
Financial debt	-	96	-	-	0.5%	-	-	7.5%	-	-	76.3%	-	-	100%	-
Currency and deposits	-	0	-	-	0.0%	-	-	0.0%	-	-	0.0%	-	-	0.0%	-
Bonds / debt securities	-	38	-	-	0.2%	-	-	5.2%	-	-	30.2%	-	-	39.6%	-
Loans	-	58	-	-	0.3%	-	-	23.8%	-	-	46.1%	-	-	60.4%	-
Insurance pensions	-	0	-	-	0.0%	-	-	-	-	-	0.0%	-	-	-	-
Other accounts payable	-	30	-	-	0.1%	-	-	12.5%	-	-	23.7%	-	-	-	-

FISCAL RULES: Fiscal rules are set out in the Fiscal Responsibility Law (FRL) adopted in 1999, and amended successively in 2001, 2004 and 2017. All jurisdictions were required to maintain balanced budgets (excluding investment in basic social and economic infrastructure and projects financed by international finance institutions) and to prepare annual fiscal programs setting forth certain fiscal policies. In 2000, a Fiscal Responsibility Council was created to monitor the implementation of the rules and impose penalties for non-compliance, ranging from public disclosure to partial withholding of budgetary transfers. However, the effectiveness of fiscal control was relatively weak due to the lack of independence of the Council. In 2009, at the height of the financial crisis, and as national and provincial governments were not able to meet the requirements for fiscal responsibility, the FRL was de facto suspended, and the monitoring of fiscal responsibility lost much of its transparency.

From 2012 until 2016, internal improvements were made to improve access and reliability of information, and in 2017, the federal government and provinces agreed to a new Fiscal Responsibility Law. The new law limits the increase in public employees at the provincial level with population growth, and commits provinces to maintain non-wage current primary spending flat in real terms.

DEBT: Argentina stands as one of the most decentralised countries in Latin America in terms of subnational fiscal borrowing, as subnational governments in Argentina, and provinces and the CABA in particular, tend to use debt to finance many of their assigned public expenditures. Provinces are granted borrowing rights through the federal constitution, and provincial debt is subjected to provincial legislatures, while municipal debt is subjected to municipal legislatures. As a result, Argentina's federal government has limited means to interfere in subnational borrowing, except in the case of foreign loans that need Congressional approval. During the 1980s-1990s, most subnational borrowing went through provincial banks, resulting in an unsustainable debt level, which exacerbated the financial crisis of 1999. As the crisis abated, notably through the relief of public debt of the provinces, and subnational borrowing resumed, a Fiscal Solvency Law was passed in 1999 at the national level. Provinces were encouraged to pass similar laws on their own.

In 2004, the Congress approved law no. 25917, which set forth new fiscal responsibility and transparency measures limiting provincial debt levels within provincial jurisdictions to 15% of the net current resources of municipalities (after deduction of revenue-sharing transfers to municipalities). In the case of domestic borrowing, for which inter-governmental transfers are used as collateral, the loans are registered with the Ministry of Economy and with the National Bank (Banco de la Naci—n). The latter has the authority to deduct any debt payment on guaranteed loans from the amount allocated as intergovernmental transfers. The Ministry of Economy must authorise all provincial loans that use co-participation funds as a guarantee. In 2010, the national government restructured almost all provincial debt within the Fiduciary Fund for Provincial Development Programme (Fondo Fiduciario para el Desarrollo Provincial). This preventive measure led to a reduction in the subnational debt level from 2003 onwards. In 2020, provincial government total outstanding debt reached 0.6% of GDP. Provincial governmentÕs debt was mostly composed of loans (60.4%) and bonds and debt securities (39.6%).

TERRITORIAL MANAGEMENT OF THE CRISIS: In Argentina, the first case of COVID-19 was confirmed on 3 March 2020 in Buenos Aires. As of 12 March, international borders were closed. President Alberto Fernandez decreed the Social, Preventive and Compulsory Isolation (Aislamiento Social Preventivo y Obligatorio, ASPO) of the population until 31 March. During this period, the movements of the population were limited, except for people working on healthcare, security, armed forces and food production and distribution. A special fund of approximately USD 15 million was created to provide public hospitals and laboratories with the equipment essential to the care of patients, and to create field hospitals in the main cities and in the greater suburbs of Buenos Aires. The Ministry of Health was designated as the authority responsible for the implementation of the health emergency plan.

The provinces, the Autonomous City of Buenos Aires and the municipalities were put in charge of implementing the provisions of ASPO, as delegates of the federal government. In practice, the provinces aligned themselves with the restriction measures of the federal government. They also enforced the closure of provincial borders. One day after the announcement made by the federal government of borders closure, multiple provinces, autonomously, took restrictive measures to try to stop the transmission of COVID-19. The Province of Jujuy ordered the suspension of classes, sports, social, cultural and religious events, and public administration services. The Province of Chaco ordered mandatory quarantine of the entire population. Other provinces such as Mendoza, Salta, Santa Fe and Misiones also took measures, although initially less restrictive, to reduce the movement of people.

As of April 12, the federal government decided to adjust the restrictive measures at the local level, according to the evolution of the number of cases. As a result, only certain public and private sector activities (mainly banking), and school activities restarted in several provinces. Restrictions were later largely relaxed in June of 2020 for all Argentinians: the Preventive and Compulsory Social Distance (DISPO) process was introduced, allowing the reopening of certain businesses and authorized the population to go out in areas where two criteria were met: (i) that the local health system had sufficient places to accommodate the sick and (ii) a weak circulation of the virus. In September 2020, almost the entire country was operating under this semi-lockdown regime, with different degrees of restrictions in each province.

EMERGENCY MEASURES TO COPE WITH THE CRISIS AT THE DIFFERENT LEVELS OF GOVERNMENT: The federal government adopted a series of measures to counter the economic emergency derived from the pandemic. It initially increased public investment in infrastructure by 0.5% of GDP and implemented a one-time emergency first payment of ARS 10 000 (USD 146) to impacted low-income people, including retirees. Additionally, a credit line was extended to boost residential construction sector through the ÒPROCREARÓ program, which represented at that time 0.03% of GDP. The federal government also allowed tax deferrals for the entertainment sectors (cinemas and theatres and restaurants), passenger transport and hotels.

Some provinces also implemented measures in addition to those of the federal government. The Province of Buenos Aires established direct transfers to the municipalities most affected by the closure of economic activity, equivalent to approximately USD 8 million; implemented a job preservation program, with payment of salaries, in all the sectors affected by the closure of the activity, equivalent to approximately USD 4 million; and incorporated 1 500 therapy beds and 1 221 respirators for its health system. In the Province of Cordoba, an exceptional regime was established for tax payment facilities, their updates, surcharges, interest, fines and/or others, for which there were debts with the Provincial Treasury.

IMPACTS OF THE CRISIS ON SUBNATIONAL GOVERNMENT FINANCE: In 2020, the COVID-19 pandemic had a strong impact on the public finances of the federal government and the provinces, preventing the 2017 fiscal agreements from fully being enforced. At the national level, in a context of health emergency and economic crisis, the National Public sector recorded a primary deficit equivalent to 6.5% of GDP and a financial deficit of 8.5% of GDP. This dynamic of deepening the public deficit was due to both the deterioration of income and the increase in spending.

With regard to provincial public finances, paradoxically, the pandemic had a favourable effect on the budget balance. In 2020, 17 of the 24 Argentine provinces recorded a fiscal surplus and, in aggregate, they closed with a fiscal surplus of 0.2% of GDP, indicating an improvement compared to 2019. The explanation is due to the fact that, although it is true that collection at all levels of government was affected by quarantine during the initial stage of the COVID-19 pandemic, the provinces were able to compensate for the fall in provincial collection through the help of the national government. The current revenues of the provinces fell in 2020 by 0.9% compared to 2019. In particular, tax revenues generally decreased by 0.8%, with provincial tax revenues being the most affected (-3.6%). Additionally, all other sources of income fell in 2020, with the exception of current transfers that increased by 89%.

On the other hand, current expenditure decreased by 1.5% between 2019 and 2020, and in particular the compensation of employees (main expenditure area of the provinces) that fell by 1.7%. Current transfers increased by 6.4%. As for capital expenditures, they decreased by 19.9%, with direct investment being the most affected (-30.6%).

ECONOMIC AND SOCIAL STIMULUS PLANS: A series of recovery measures were implemented at the federal level starting in March 2020. In general, the federal government created a series of programs with the aim of increasing domestic investment, for a total amount of ARS 77 270 million (approximately USD 700 million). Some of the most important programs include: the Argentina Construye program (Argentina Builds program, USD 250 million), which finances residential housing, and have been implemented by national, subnational governments and social organisations; the "Critical and direct support programme for family, peasant and indigenous agriculture", which provides supplies and tools to individuals or communities who are registered in the National Registry of Family Agriculture; the "National programme of reactivation and finalization of Construction projects", which is added to the Housing credit program "Plan Procrear" (USD 250 million USD), provides support to construction projects that were interrupted because of the pandemic; and the ÒPreviajeÓ Program (USD 135 million), which subsidises credit to cover 50% of tourism expenses for national residents. Recovery measures have a specific focus on digitalisation, corresponding to the increase in the total amount of the Competitiveness Support Program (PAC), aimed to support Business Development Projects for digital transformation.