An assessment of fiscal and financial constraints in provinces

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An assessment of fiscal and financial constraints in provinces

Febrero 2012

It seems clear that the fiscal situation of the provinces has become tighter in recent years, an issue that has raised questions about the ability to service their debt.

This report argues that most provinces are only running small deficits following an election year, and while the fiscal situation is tighter than in previous years, there are no major fiscal or financial problems in the provinces.  This situation is also true for the four districts that have the largest stocks of publicly traded debt (the city and the province of Buenos Aires, Córdoba and Mendoza).  These districts generate adequate revenues and should have the capacity to raise enough financial resources to continue to service their debt.  Nevertheless, they still owed a large portion of the debt to the Central Government and they depend on its willingness to continue to refinance it at favorable terms.