Vertical and horizontal fiscal imbalances exist in the bulk of the Argentine
subnational governments (both provincial and local). In this sense, the
resources of the federal government dominate, amounting to about 80 percent
of total fiscal revenue, including social security contributions (Asensio
1990, 2000, 2003; Gómez Sabaini and Gaggero 1997; Rezk 1999).
Here we try to estimate this imbalance in a subgroup within the subnational
conglomeration encompassing the second and third levels of government.
The attempt is significant because there is substantial debate about the
fiscal imbalance of Argentine provinces, but such debates do not always
occur with regard to municipalities and communes.
Thus, it is important to analyze the parallel existence or absence of
financial autonomy on the local level in Argentina. This idea will be considered
in the sense outlined by Shah (1994), whose ultimate purpose involves
determining the capacity of a level of government to meet its expenditure
needs with its own resources rather than through transfers and tax shares
received from other levels of government.
Table 10.13 shows that the vertical fiscal imbalance of all Argentine local
governments is not significant enough to conceal a relatively satisfactory
degree of financial autonomy. About 55 percent of local government disbursements
are financed with the local government’s own resources. Thus,
the “margin of financial action”on the whole cannot be deemed negligible.24
However, when we look at the situation is specific provinces, significant
nuances appear. Table 10.13 shows that there are major differences between
the vertical imbalance and the degree of financial autonomy for the country
as a whole (local governments nationwide) and those for local governments
in individual provinces.
The financial autonomy of local governments in larger and moredeveloped
provinces is much greater (and therefore their imbalances are less),
whereas local governments in provinces with less development have greater
dependence on transfers and shares, indicative of significant vertical imbalance.
Although the municipalities and communes of Buenos Aires and Córdoba
finance, respectively, about 63 and 66 percent of their disbursements
with their own resources, those of Catamarca and San Juan finance only 15
and 25 percent, respectively, which leaves them dependent on transfers and