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Argentina: Many Failed Attempts on the Way to State Reform 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 María Ester García 
 Sindicatura General de la Nación 
 
 
 
 
The opinions expressed in this paper strictly represent the author’s personal judgments and they could 
differ from the opinion sustained by the institution where she works. The author is very grateful to Carlos 
Ballanti, Marina Caracini and Lia Gens for their contribution. 
 
 
 
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Abstract 
 
Major state reforms in Argentina were legislated and to a great extent implemented 
during the 90’s. They didn’t result in all the renovation and benefits foreseen but, in a 
contra factual exercise, it is an unpleasant idea to think of Argentina without those 
reforms. Some of them were addressed to modify State according to the Washington 
Consensus premises, other were designed to enhance public management issues in order 
to support the first ones. These reforms don’t fully accomplish the proposed outcomes. 
The processes that create policies are central at the time of explaining the failure. The 
reform process results in a weaker, a little smaller but not less expensive State and 
impoverished in its human capital and values. Internal control matters followed the 
changes produced. 
 
 
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“Politics lies at the core of management reform, not vice versa. Management reforms have their genesis and sustenance in the 
degree to which they help solve political problems.” Larry Jones & Donald Kettl 
 
 
Introduction 
 
 
Trying to explain our paradoxical recent past very often seems to be an impossible task. 
Lots of political and economical inconsistencies paved our road. In the paper it will be 
exposed, in a limited scope, the ordinate sequence of the most important effort made to 
modernize State in Argentina, with special consideration to the public management 
policy making process involved and its impact on control issues. The author will try also 
to explain the factors that undermine these reform processes. This case seems an 
interesting and complex example of a major effort that was successful at its beginning 
and was then dilapidated by political ambitions and managerial incapacity in just 10 
years. 
 
The main research questions addressed in this paper are: 
 
Was the state reform in Argentina successful? 
How did the public management policies perform during the 90’s state transformation? 
Were those policies the best to fit proposed reforms? 
Which factors could explain the outcomes achieved? 
Which issues need to be addressed in order to accomplish the goal of a modern and 
effective state? 
 
This paper is organized in four sections, and continues in some way, the analysis made 
in previous works1. So, many of already stated arguments will be presented. In section 1 
a brief and partial analysis introduces the context in which the state reform performed. 
Section 2 reviews the experiences of Argentina on modernizing its Public Sector and the 
related public management policies implemented. Section 3 deals with the consequences 
of reform on control issues, with regard to internal control practices. Section 4 offers 
some concluding remarks. 
 
 
Section 1: Context 
 
 
Argentina has had in the past a strong economy, a significant middle class segment, 
high levels of literacy and infatuated itself as a rich true European enclave in Latin 
America. It was in 1913 in the sixth world position due to its GDP per capita. All of this 
remains in the collective unconscious. 
 
The 1930 crisis motivated an abrupt change in its conditions. As a consequence of the 
fall in commodities prices, the export incomes fell a 34% and the production a 14%. 
Imports were suspended by the crisis and the domestic industry substituted them, 
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favored by exchange controls. The state intervened throughout regulation in order to 
stabilize markets. From this deep crisis a new State role emerged: one that related 
economics with social matters. This welfare state reach its momentum during Perón 
administrations (1945-1955). State managed agricultural and industrial promotion, the 
credit, insurance and international commerce. 
 
As times goes by, different populist and military governments ruled the country while 
the model exhausted and the economy tried to find new ways. That richness has been 
lost along with values associated to rule of law and democracy. In the late 80’s 
Argentina faced a severe crisis, both financial and energetic, assuming the dominant role 
that an over-dimensioned State had played in its situation. It was the reform momentum 
and state reform was enforced. Due to its good performance, Argentina became an 
enfant gâtée of international capitals and multinational lending institutions as model of 
those benefits derived from the free market reforms adoption. The new century found us 
in the middle of an economic recession that could be handled - if taken seriously - but 
the prevalent political preferences didn’t adopt that way. Partisan and sectorial interests 
drove us to the major crisis and the biggest default in history, with a Congress 
applauding that measure. They were the same legislators that a few months before had 
granted Executive Branch widen powers for opposite policies. We passed from a kind of 
world to another very different. Reforms related to modernization had played a 
significant role in the recent past and now they have disappeared from the political 
agenda. The matter is today only addressed as IMF conditions for continuing lending 
operations on matters as utility legal regulatory frame and bank sector reform. And 
everybody knows that to many politicians and a significant part of our public opinion 
IMF is the mother of all our disgraces. Our behavior is just an exogenous variable. 
 
During the ’90s Argentina developed an unprecedented, ambitious and deep structural 
state reform mainly at federal level, framed in what is known as “Washington 
Consensus”. Its program of macroeconomic stabilization, transfer of services and 
publicly owned firms, and deregulation, was implemented in a very fast way with the 
immediate support of both its people and the international community, specially the 
multilateral lending institutions. During the first years the macroeconomic performance 
of the plan was impressive. In 1998 the economy suffered a recession. It was motivated 
by Argentina’s fiscal misconduct and its dependence on external capitals to balance the 
budget, at a moment when international financial markets were in crisis. Tax measures 
adopted in 1999 worsened the situation. This scenario drove Argentina in December 
2001 to an unparalleled crisis in history. We stay still there and the analysis of the path 
followed indicates the “cut and paste” of the measures adopted in a very short period, 
the lack of previous assessments, institutional weaknesses never addressed (lack of 
effective organizations), a debt-based development addiction that began with the nation, 
our own social behavior (systematic transgression to basic rules of democracy and 
society, rule of law), the dearth of a regulatory framework for the privatized enterprises 
and, last but not least, the peculiarities of policy making processes in Argentina. I am 
going to focus, in next section, some of these aspects. 
 
Of those major reform efforts performed, the first one was the wider and most 
comprehensive, addressed to reform the State. It was implemented during President 
Menem administration and took almost four years to be implemented. That state reform 
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was associated to a constellation of public managementpolicies, among them control 
issues made a significant shift. Then, during the brief President De la Rua administration 
the reform effort was more focused to very detailed public management policy 
proposals but it didn’t disdain to expose the roles State must play. The reform should 
affect the control model introducing the concept of performance and results to be 
considered. All these attempts greatly differed in its outcomes from the stated rules. 
 
Much of the public management measures proposed were common to both attempts, 
due in part, to the presence of the same high-level technocratic groups involved. The 
policy making processes, that could be easily described as proper by the so called 
delegative (O’Donnell) or hybrid (Malloy) democracies (those who have some formal 
democratic features as electoral processes, coexisting with authoritarian forms of 
political control, linked to clientelism, bureaucratic patrimonialism and corporatism) 
were also similar. The idea of civil society intertwining with the State is in these latitudes 
still vague rhetoric. 
 
To these efforts the common features were: 
o Top-down strategies adopted in an inner circle without any kind of previous 
debate (but with formal legislative treatment for its approval during President 
Menem administration) 
o Reforms made within the frame of negotiations with multilateral lending 
institutions such as World Bank, IMF, IDB. 
o Decision making authority in hands of technocrats who strongly influenced the 
policy agenda 
o Highly personalized policy processes 
o Use of legislative powers by the Executive Branch 
o Lack of strategic planning 
o Short time allowed to do the reform job2 
 
The present (2 years after default) scenario could be characterized as follows: 
 
· While our society is massively declaring its adhesion to democracy versus any other 
type of government disdains its constituent institutions, while parties and politicians 
have got a generalized anathema. 
· Lack of an explicit economic program, instead: contingency measures 
implementation referred to as “pragmatism”. 
· A very poor investment environment. 
· A decrease in unemployment rate to 19.4% after reaching more than 24% 
· A prudent monetary policy has been maintained as well as the independence of 
central bank policies3 
· Devaluation got a precarious primary surplus on fiscal budget, basically by duties 
collected on agricultural exports and an exceptional international price for 
commodities (soy) and a price increasing trend; 
· 50% of the population is below the poverty line, with recently impoverished middle-
class segments. 
· Fiscal spending is growing slowly, as long the government needs political support for 
some of its proposals: direct assistance programs, public infrastructure and the 
recreation of national enterprises are among the main reasons. In the last times some 
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signs of economic desacceleration have appeared; pensions have been increased and 
a wages rise announce is also in the air. All of this results in an increased expending, 
despite the primary surplus. 
· The key structural reforms requested by IMF refer to sustainable public finances with 
special emphasis on provincial fiscal behavior, tariff increases, restructuring public 
debt, central bank independence and legal predictability. 
 
Following an Argentinean Memorandum4 to IMF authorities, “the main risk to the 
program is that key elements of fiscal and banking reforms that are crucial to 
sustainability will only be formulated at a long run.” These main risks detected are the 
uncertainties about the eventual political consensus for the essential aspects of the 
reforms needed and the credibility of the debt structuring strategy with private creditors. 
 
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Section 2: The Reform Issues in Argentina 
 
 
In this section the experience of Argentina on modernizing its Public Sector and the 
related public management policy making processes will be introduced, in a limited 
scope. 
 
1977-1983 
 
Reform issues were present many times and with different strength in the domestic 
agenda. During the military regime (1976-1983), referred to as “Proceso de 
Reorganización Nacional”5, strategies were followed in order to restore balance to public 
finances6. They tried to bring to public sector some of the ordering and information 
systems proper of private and military sectors. During this period the idea of privatizing 
some public enterprises, of the few broken ones that the State took over its custody, was 
suggested. Public expenditure on personnel fell down from 12% of GDP in 1975 to less 
than 7% in 1977. Tax collection improved, provincial budgets were adjusted and 
financial control of state owned enterprises got some success at the beginning. In order 
to sustain the stabilization, during 1978-81 period, the exchange rate and the public 
service tariffs were regulated. During period 1981-83 the fiscal unbalance increased, due 
among other reasons, to military equipment procurement for Malvinas war, a strong fall 
in the tax collect, inflationary acceleration and tax evasion. 
 
1983-1989 
 
Argentina returns to democracy in 1983. President Alfonsín’s administration devoted all 
its energy to strengthening of political framework and tried to moderate, to a certain 
extent, the fiscal unbalance. During 1985 and 1986, an important increase in the tax 
revenues and in the fiscal incomes in general helped to mend the situation; it was based 
on high exports duties, special taxes and tariffs advanced in relation to the public 
enterprises wages. Public expenditure on ordinary outlays was not reduced. In 1987 
President Alfonsín’s administration contemplated a heterodox economic adjust plan in 
order to get some stabilization -Plan Austral- that ended in a fiasco7 and reinforced the 
assumption on the structural origins of the crisis. It has to be pointed out the emerging 
idea of a Third Historical Movement, a populist expression that contributes to erode his 
political situation. The political reinforcement did not include the institutional building 
and reform of every democratic transition in order to keep abreast to the times. An idea 
of constitutional reform was introduced, one to aim a shift from a presidentialist regime 
to a parliamentarian one besides the strong historical roots the former one has. As 
O’Donnell8 points, the State was conquered by the party, putting its people in every key 
place, practicing an extensive clientelism in order to accumulate power with no 
conception of general interest in mind. 
 
In August 1988, it appears the so called Plan Primavera that tempted to control inflation 
and improve real wages in order to be better positioned to cope with the electoral time. 
To reinforce that purpose, the elections were advanced letting 8 months between them 
and the new presidential term. President Alfonsin contemplates privatization of some 
publicly owned enterprises, such as the national airline (Aerolíneas Argentinas), but 
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faced strong opposition of the Justicialist Party at the Congress. The economical aspects 
were not properly addressed and several months before the end of his term the country 
faced social revolts provoked by hyperinflation. It ended in a declaration of the state of 
siege. Capital flight has intensified, and the national currency was almost dismissed. The 
persistent inflationary process, the over dimensioned state and its functions, the poor 
quality of the services delivered, the increased public expenditures and consequent 
budget deficit, among other conditions, drove politicians and public opinion to realize 
that the recurrent crisis were due to structural determinants and it was necessary to face 
deep reforms. In the policy making process associated to this view, the action of strongpower groups, such as UIA (Industrial Union) and SRA (Rural Society) had to be 
recognized. For many years and throughout many press releases and economical studies 
it had been showed to public opinion the adduced origins of the severe crisis9. The 1989 
debacle drove to a radicalization of the argumentation and state reform became part of 
the political discourse. 
 
Late 1989- 199910 
 
It was time of presidential election and the opposition won the contest. The confidence 
in the ability of State to perform key functions had extensively diminished. In a 
turbulent scenario, Government trespassing was anticipated and President Menem took 
his period five months before the proper date. Prior to his anticipated inauguration he 
got the outgoing party’s compromise to support the legislative approval of economic 
instruments to be proposed by his new administration. 
 
The electoral campaign’s platform, as all of them, was imprecise about the measures to 
be sustained but Menem’s administration comes preceded by a “populist” label, not the 
best label indeed to gain the support of the economic establishment. During the first 
months of the new administration, the economics recipe applied was similar to the 
previous ones and the confidence didn’t appear; so, a shift in the economic policy was 
made. 
 
Electoral promises are promptly forgotten in Argentina and “who wins a presidential 
election is enabled to govern the country as he sees fit”11. The new administration 
assumed as own the prevailing opinion about the causes of the crisis, the need for a 
change became widely accepted and state reform was the resulting outcome. To perform 
such changes President Menem called Dr. Domingo Cavallo as Economy Minister and 
implemented his plan to fight inflation and introduce fiscal discipline, therefore 
generating great confidence in the markets. The reform process had followed the formal 
democratic procedures, including the legislative approval, but the entire process was 
conducted in a personal decision making style, thus avoiding deliberative mechanisms. 
The main idea was that economic stability would ensure political stability to the fragile 
democracy. The public support, after the hyperinflation nightmare, was broad. 
Technocrats monopolized the policy agenda, while politicians got some kind of reward 
for their loyalty to the program in exchange relations. Why did technocrats monopolize 
the agenda? Mostly because the more severe the crisis was, more dependent were the 
politicians on them in order to get results that enabled the first ones to maintain their 
situation. 
 
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In 1989 was declared an emergency status in the Executive Branch12. This exceptional 
measure allowed to transform the legal status of all operating administrative units, to 
create new agencies and to put publicly owned enterprises to partial or complete 
privatization (after legislative approval) and also to install government appointees in 
agencies. 
 
In own words of the then current Treasury Secretary, Ricardo Gutiérrez13, it is possible 
to get a clear definition on the reform process: “In Argentina there was not an explicit 
definition of the new State roles. All Argentineans knew which the unwanted State was. 
Then, a reform appeared. But if someone asked me if the reform theory was written, I 
would say no. It was a political movement toward a solution.”... “Who are authentically 
convinced of the advantages of this model are we, technicians.” 
 
In a brief and partial glance, Argentina’s macroeconomic conditions in the pre-reforms 
scenario featured: 
· closed economy: protectionism that distorted industrial competitiveness; 
· economic stagnation; 
· considerable domestic and external public debt (partially explicited and partially 
shadowed); 
· national public debt financed by Central Bank, as long as provincial banks did to 
provincial states14 ; 
· public sector annual cash deficits had run of 6-10% of GDP throughout the 80’s; 
· strong state intervention on markets and subsequent income transfers among 
sectors; 
· minimum investment levels; 
· state owned enterprises with old fashioned and non productive structures, losing 
large quantities of money and providing very poor public services, with a weakened 
management and privileged working conditions for over dimensioned personnel 
structures. 
 
The macro social conditions’ scenario, also in a brief and partial glance, included: 
· a politically skeptical population, while it was trying to rebuild the concept of 
democracy15; 
· political institutions adversely affected after years of extreme inflation, broken rules 
and inefficient administrations; 
· a popular feeling about the lack of managerial control in the different levels of 
government and the belief that transparency in the government activities is just for 
other countries; 
· low credibility on government as a solution provider, and the subsequent loss of 
governance plus a very poor opinion about public officials; 
· growing social expectations; 
· a bureaucracy affected by very frequent political changes (that does not necessarily 
mean a ruling party’s change, but an internal faction change inside the governing 
party) ; 
· citizens demanding better service quality and drawing attention to their customers’ 
rights; 
· wide consensus about the urge of a deep reform in the State, without precision about 
its features. 
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During Menem Administration reforms were made in two differentiated phases, the first 
one mainly addressed to reform the State and the later to reinforce that process 
enhancing public management. In order to accomplish its task, the Government 
implemented the so-called “State Reform I” (1989)16 and late the “State Reform II” 
(1996)17. The first stage was oriented toward a redefinition of the State role, mainly at 
federal level. The reform comprised key functions to be performed, state owned 
enterprises privatization, a proposed fiscal and monetary discipline, changes in public 
management and the introduction of new technologies. The second one was mainly 
addressed to public management issues. 
 
State Reform I 
 
Under this label a comprehensive program that included fiscal, monetary and structural 
reforms was implemented. The main tools were: 
· convertibility (a sort of Currency Board), cornerstone of the stabilization process, that 
fixed the parity one peso equal one American dollar, 
· elimination of fiscal and quasi fiscal deficits, 
· selling of the state owned enterprises, 
· a new Financial Management Law, 
· deregulation and market liberalization 
· an administrative emergency was declared and governmental apparatus gone into 
radical revision. 
 . 
This constellation of changes was implemented in a relatively short period of time, in a 
very fast and decided way alleging the critical situation. Policies were adopted following 
contemporaneous events in other countries and based in a very strong political 
leadership, with the technical support of well-formed elite. The respective policy making 
process (one which avoided transparency and former deep discussion of the measures to 
be implemented) affected to some extent public perception on the legitimacy of the 
reforms. An arising question in some sectors of society was if government did manage 
in order to social interest or private ones and for many people the privatization process 
was inseparable from corruption related to state practices. In just four years the national 
oil company, the railways, electric energy, telecommunications, airline, TV and radio 
stations, petrochemicals, steels and ship-yards were sold. The call to auction 
characteristics favored the presence of few offeror groups and in many cases the process 
was subject to irregularities. The systems of checksand balances were weakened: the 
Supreme Court of Justice was modified in its member’s number and the possible 
debates in the domestic political arena were impaired by the agreement made between 
the two major political parties prior to the advanced assumption. 
 
In order to reinforce the measures adopted within the State Reform Act frame, a new 
Decree was issued in November 1990, addressing public management issues. It 
intended to attack the operative inefficiencies, which were affecting the administrative 
organization and the quality of services. The situation was characterized as “reaching 
dangerous limits”. The measures were oriented to obtain a substantial enhancement in 
administrative efficiency and rationality, decision capacity and to restructure the 
administrative body. The idea of less complicated administrative procedures and smaller 
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organizational units was dominant. Such as were the ideas of technological 
modernization and improvement of public attention. All the administrative structures 
had to be derogated and the new ones had to be submitted to an Executive Control 
Committee for the Administrative Reform (CECRA). 
 
A new Civil Service regime project should be presented by the Public Function 
Secretariat to the Executive Committee’s consideration. Said project should feature a 
modern and professional Civil Service, one that brings prestigious status to agents labor, 
introduces new managerial technologies and privileges training, merit, competitiveness 
and productivity as foundations of a Civil Service career. “The idea of a professional 
Civil Service was materialized through the approval in 1991 of the National System of 
Administrative Profession - SINAPA, following the name in Spanish: Sistema Nacional 
de la Profesión Administrativa. The system was supported by principles of merit, 
training, unbiased selection and productivity systems as foundations for recruitment and 
progress in the public servant career. The tool had been considered as guaranty of 
immediate administrative restoration of accountability at all levels. The system failed in 
its implementation due to the lack of a previous personnel assessment and to the 
absence of a professional guidance in the process. The mismanagement of the change 
from the old system to SINAPA caused many inequities and organizational discomfort. 
It relied almost entirely on political premises.”18 
 
Meanwhile, it has been a dramatic turnaround in the economic and social scenario. The 
economic program was succeeding and social optimism was growing. Such conditions 
brought Government great confidence about certain possibilities for its reelection. 
 
The idea of a Constitutional reform regains forces (it was once favored during President. 
Alfonsín administration). The reform was conducted by strong political leaders (Menem 
and Alfonsín) who prefer, as usual, weak institutions. The main objective, from the point 
of view of President Menem and his party, was aimed at the presidential reelection and 
the softening of conditions to go to ballotage. In 1994, a 70% of the original 
Constitution was modified, during three months of work. The reform has as an explicit 
objective to attenuate the strong presidencialism throughout a new figure (the Cabinet 
Chief); instead it gives constitutional status to the legislative powers of the Executive 
Branch (the so called emergency decrees). A bicameral Committee is in charge of 
controlling the government’s use of emergency decrees. It was ordered in the 
constitutional reform but never carried out. The real fact is that Congress play since long 
time ago a passive role. Many legislative functions were delegated by it: those related to 
tax revenues, national universities, public services, customs, and electoral system. 
Other features of the new Constitution were semi direct democracy mechanisms, 
customers and environmental rights, transparency for the political parties functioning, 
regulatory frame for public services and regulatory agencies. It shows what was called 
“constitutional snobbism”19, introducing juridical novelties from over the world. 
 
President Menem was reelected in 1995. Among his campaign promises was the 
reforms’ deepening and it meant reinforcing public management issues because major 
surgery was performed and the state has changed its role to a great extent. The country 
had faced a severe financial situation due to the consequences of Mexico crisis but could 
respond successfully to outside events. Fiscal control was difficult, due to the federal 
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system of government20 combined with the reluctance of provincial states to curb their 
expenditure growth and their poor revenue performance. In 1996 Dr. Cavallo was not 
anymore Economy Minister, but the main features of the former plan were still in place. 
 
 
State Reform II 
 
 
Under this label another public management reform was introduced to cope with the 
needs of the new State and to assure the state reform recently performed. In February 
1996, Act 24629 was enacted. Its purpose was to develop a management model for 
central administration and decentralized entities, and to transform the respective 
regulatory frame in order to get a total state reengineering, orienting allocation of 
resources and results toward citizen service. This process would be held through 
modifications, mergers or consolidations, transference of agencies to provincial 
governments, partial or complete abolition of objectives, competencies, functions and 
overlapped or unnecessary duties, and privatization. The Executive Branch implemented 
a special fund21 in order to give to those civil servants whose positions were suppressed 
(due to the measures adopted under this Act mandate), training and technical assistance 
for self-employment programs and other kind of community associative organizations. 
It was financed out of public assets sales or public indebtedness and was the managed 
by the Labor Ministry. 
 
During this implementation no effort was made to retain valuable human capital, and 
said valuable human capital, that have opportunities in the labor market, made no effort 
at all to stay in the civil service. Many of them just wanted the compensation in order to 
develop personal projects. A further analysis shows that the financial effort made was 
not followed by the definitive suppression of all positions held vacant due this measure, 
as it was stated. Since at the moment neither the mechanism rejects determined 
positions or qualifications, nor establishes the necessary conditions to monitor the 
program or any kind of assessment of the measures, it was designed as a legal procedure 
to obtain money from the State. It was a bogus mechanism: it didn’t block the chance 
of reentering under other contractual regimes and it served as the revolving door for 
many people who do have the contacts and may be the skills. 
 
Among another factors, it is widely accepted that one of the reasons that conspired 
against the effectiveness of the reform measures was the decision of President Menem 
of running for a third consecutive term in 1999 forcing a Constitutional reinterpretation. 
The momentum was not the same for reforms: some problems were emerging22 and 
credibility on government was attenuated. The economical cost of the measures taken 
and the fiscal consequences of the informal pro-reelection campaign (public funds 
allocated among provincial Governors according to political needs) have had strong 
influence in the following events. The differences between Mr. Menem and other 
members of his Party were eroding the situation and this entire drove us very far from 
the institutional quality required in order to get sustainable reforms. The Justicialist Party 
lost the elections. 
 
1999-2001 
 13
 
In 1999 Dr. Fernando De la Rua followedDr. Menem in the Presidency; he represented 
a political coalition that made of ethic and fight to corruption its motto. During President 
De la Rua administration the reform issue in order to modernize State became a very 
important one, in theory at least. The change was heading to a second generation of 
reforms: state promoting social and economic development, responsible for the less 
favored sectors, based on ethic and transparency. It was accepted that previous reform 
attempts had failed due to the generalist practice adopted. So, this time concrete and 
specific actions will be imposed aimed mainly at enhancing operational aspects of public 
management. The reform design was targeted to modernize federal government but the 
conceptual corpus could fit provincial and local governments too. The proposed reform 
contemplated the predominant tendencies on public management policies. It was 
ambitious and precisely defined, but emerging questions arouse: with which people and 
in which society this process could be successfully performed. Previous voluntary 
separation regimes produced a sort of severe human decapitalization, and the last 
separation was accepted as a mistake by President De la Rua (responsible for the 
measure) in his inauguration address to 2001 CLAD conference23. 
 
The Vice-president Alvarez (from a different party than Dr. De la Rua) was in charge of 
the State Modernization process. A Secretariat and a Commission were created for that 
purpose; the members of the Commission were four State Secretaries, the Síndico 
General de la Nación24, and the Deputy Secretary of Gestión Pública (Public 
Management). The Secretariat was conceived as technical support to the Vice-president. 
According to words of the current Secretary in charge (Marcos Makón) “State 
Modernization was created under a wider vision than traditional administrative reform 
concept or public management reform”25. The three pillars of the reform were: 
modernization of public management, political reform and knowledge and society. The 
political reform idea was looking for transparency in the political relations, the political 
parties’ role and their strengthening, a transparent financial support for the parties’ 
management, and transparency also in electoral processes and candidate’s selection to 
public duties. “Knowledge and society” implied to formulate a new role for State in a 
globalized world and get how Argentina could enter in the knowledge society. Fiscal 
balance was considered as a main issue in this reform, and visualized as a basic but not 
sufficient need if the existing structural rigidities were not removed. State was defined as 
costly and inefficient. A core issue for this reform did not involve the amount of the 
public expenditures, but the quality of the services provided. At that time, public 
expenditures were 30% of the GDP; not too much considering USA and EU rates. But 
here the problem laid on tax revenues. The widespread opinion about the high public 
expenditure was explained as related to the burden tax’s inequities on population and to 
the fact that the middle class segment paid taxes and also had to buy services from 
private providers that could be publicly provided (education, health, and security). The 
public expenditure redefinition connoted the change in the way public management 
performs its duties. 
 
This process also put on discussion, once again and very limited in time and actors, the 
kind of State Argentina wants: its key functions26. The main features of the proposed 
reform were: a friendly and committed with the citizens State; a high quality, efficient 
and effective services provider State; a social and economic development promoter State 
 14
that takes care of the less protected sectors of the society and was financed by a wide 
based and equitable tax system. It was also appraised that social expenditure must not 
represent a heavy burden for society and that transparency was a goal. 
 
The axes articulating the plan were: 
1. a results oriented management; 
2. a rational imputation of functions eliminating overlapping, 
3. an strengthening of basic policies on justice, health, education, social security, social 
promotion, employment, security, defense and science and technical promotion; 
4. regulatory capabilities 
5. tax administration and 
6. enhancement of civil society participation. 
 
This public management reform took as major transversal change the human capital 
management in a competencies based frame. All what was stated represented the last 
and best in market. But how reasonable was to adopt such radical changes without 
previous assessments about the resources to be applied to the process? Another 
transversal change was the procurement system. State was characterized as an inefficient 
purchaser, due to outdated (1956) rules and regulations, technology and criteria. Those 
rules let aside wide possibilities, brought by communications, science and technology 
developments. The goal was to obtain efficient and effective procurement practices that 
could be controlled by civil society. 
 
Previous efforts made on the Financial Management System during the Menem 
administration were praised as essential. The systems underwent a comprehensive 
revision due to their non-integrated, autonomous and anarchic operatives. But important 
duties were pending on this matter: the development of automatic registration of human 
and physical resources procurement in the accounting registers, in order to get financial 
information that accurately reflects transactions. A reengineering process was proposed 
as a solution in order to implement an unique financial management system for the 
entire Central administration. 
 
The reform would also include transparency and anti-corruption policies. Corruption 
was declared as central question on public agenda; it was perceived not only as a moral 
issue, but also as a public management one. This was one that affects economic, 
institutional and social development. The problem would be addressed through ruling 
quality, public access to information and civil society participation. 
 
Once again, government failed to impose fiscal discipline: public expenditure was 
growing and in order to finance current expenditures outlays more public debt was 
issued. The goal of a balanced budget was not obtained through the use of genuine 
financial resources. The whole situation worsened and reforms remained in paper. 
 
Vice-president Alvarez resigned on October, 2000 amidst his accusation of improper 
payments to Congressmen in order to get from Legislative the enacting of an IMF 
requirement on labor market conditions. In January 2001 IMF supported Argentina with 
a large package, the so-called “blindaje”. The Economy Minister Machinea resigned and 
President De la Rua called Dr. López Murphy to office to replace him. He lasted 10 days 
 15
in office, after declaring the need of a deep structural reform and mentioning the 
personnel surplus. In order to give the markets good signs and to multilateral lending 
institutions a well known name, President De la Rua called Dr. Cavallo for a second time 
to office as Economy Ministry. This time, the markets didn’t answer to Dr. Cavallo’s 
appeal and the severe financial situation deteriorated day to day. 
 
In July 200127 a Presidential Order, stated the acceleration of the “comprehensive state 
reform” in order to reinforce the “zero deficit” principle. Section 2 of this Presidential 
Order call for an accentuate profesionalization of civil service, giving participation to 
unions in the reform issues, fight against tax evasion, limited the wages (the top was the 
Ministry remuneration), etc. But the situation deteriorated daily and the proposed 
measures had no impact at all. The banks suffered runs on deposits and restrictionson 
the use of cash were imposed. Bank system was almost collapsed, government ended up 
using the reserves of the entire system. December 2001 Dr. De la Rua left the power 
among popular riots. 
 
 
2002-2004 
 
A sequence of wrong economic measures transformed a recession into a depression. 
The story follows with many presidents in a very few days, the public debt repudiated in 
the biggest default of history, bank deposits frozen, property rights undermined, the 
peso Convertibilidad annulled and all these extreme measures were approved by the 
same legislators that granted full powers to Executive Branch, just a few months before. 
 
Also has to be punctuated the condemnation of the measures adopted during the ’90 as 
the mother of all the problems and the Manichaean discussion on state reform. Recently 
the IMF28 stated “... the fundamental causes of the crisis, it is our judgment that it was 
essentially a combination of the failure of Argentinean policy makers throughout the 
1990s-and during the crisis period of 2000-2001-to take the necessary corrective action 
to make sure that domestic policies were compatible with the choice of the exchange 
rate regime. ..., but the fundamental problem of policy making was the inconsistency 
between fiscal policy, particularly the size of the public debt and the fact that most of it 
was borrowed externally; the incompatibility between that and the choice of exchange 
rate regime-the hard peg, convertibility regime that essentially constrained other 
macroeconomic management choices.” 
 
At the present time, there are some clear indications of the government's willingness to 
play a more active role in the economy reassuming functions let aside, after the state's 
withdrawal in the 90s. The official discourse talks about “breaking the neoliberal chain of 
the 90’s and not to return to state monopoly”29: a middle point between the free-market 
reforms and the state interventionism. Following that idea, at this moment it is discussed 
at Congress the creation of an new state-owned energy enterprise which will play a 
regulation role in that market, avoiding oligopolistic practices. This company will explore 
and develop oil fields, as well as transport, storage, distribution and commercialization 
of those products. It is interesting to point out that the legal format proposed by 
Executive Branch is closer to private sphere and that Congress rejected that format 
alleging control failures. ENARSA was designed as private stock company of mixed 
 16
capitals: will be 53% on hands of federal State, 12% will be controlled by provincial 
governments and 35% will be listed on Stock Exchange. Some of the privatized 
enterprises are returning to the state ownership and/or management: as the Post Office 
(Correo Argentino) whose concession has been rescinded due to “unsatisfactory 
inversion records” and some railways sections. Also State has taken care of airlines 
companies in crisis and a new airline was created (LAFSA), which will be privatized 
next December, accordingly, to press releases. The renegotiation of utility contracts, 
whose discussions are supposed to be completed by the end of the year, is still a 
pendent matter. 
 
At this moment, September 2004, the public management modernization issue doesn’t 
appear neither in the official agenda or the presidential discourse. Despite that absence, 
during the term of Dr. Beliz as Justice Minister, many administrative reform initiatives 
were introduced. His recent resignation and the controversial public statements made 
about the reforms by his successor, avoid assessing their continuity. 
 
 
 17
Section 3. - Control Issues30 
 
 
To be accountable for collecting and spending citizen’s money is an ancient concept so 
old as democracy itself. The subsequent control of activities afforded with that money 
too. Since 1870 the control within the Central Administration was in charge of 
Contaduría General de la Nación, and in 1956 the Tribunal de Cuentas (Court of 
Accounts) headed it. On April 1991 the Executive Branch sent to the Congress a bill in 
order to reorganize the financial administration and the management control within the 
Public Sector. The aim was to support the process of State modernization and 
subsequent public management reforms initiated in late 1989. Until that moment the 
control within the public sector had been undertaken by the Tribunal de Cuentas de la 
Nación for the Public Administration and by Sindicatura General de Empresas Públicas 
for the state owned enterprises. A previous control within the Public Administration was 
exercised by Contaduría General de la Nación (National General Accounting Office) and 
also by Tribunal de Cuentas de la Nacion delegates, accredited in every entity. This 
meant in practice previous control undertaken by an external Body. 
 
As part of the reform process, the Act 2415631 was passed in 1992 and it was named as 
Financial Administration and Control Systems in the Public Sector. It establishes a 
control model for the Executive Branch (Central Administration and decentralized 
organizations), and government agencies that have not been privatized. It is supported 
by an internal control system and an external one. The internal one is ruled by the 
Sindicatura General de la Nación (SIGEN), the General Controller’s Office, and is 
integrated also by the Internal Audit Units (142 at this time). The conceptual frame first 
appeared in the Integrated Model for Financial Management System, Control and Audit 
for Latin America (SIMAFAL in Spanish), presented by the International Development 
Agency in April 1991. 
 
The Act has established an integrated and integral control model based in the 3Es: 
economy, efficiency and effectiveness. The model was sustained on two pillars: 
legislative external control and internal control conceived in a very modern way. This 
law apprehends the evolution that the concept of control has suffered, from a formal, 
legal and financial approach to a management process focus. One peculiarity of the 
enacting is that the law links Financial Management and Control. 
 
In the considerations of the message presented to the Congress32, it was stated: 
· The project rules in order to bring rationalization to the Public Sector’s financial 
administration and to build a structure of internal and external control over the 
financial and operative management of public organizations. 
· It shall motivate a great advance in the improvement of the republican system of 
governance and in the reinforcement of democratic practices in the country. 
· It shall also be a new barrier for the diverse forms of corruption, which had 
proliferated in Argentine society, favored by the 1989 economic crisis that also 
affected the public sector. 
· It shall facilitate a great transparency in the mechanisms for controlling the 
procurement and the allocation of public resources following the objectives and 
policies defined. 
 18
· The practice of a “previous control” carried out by external institutions was defined 
as inconsistent with modern financial administration schemes in public sector. 
“Previous control” included in the internal control structure, becomes one of the top-
level duties in each one of the state entities. 
· Sindicatura General de la Nación has to be the President’s Auditor, conducting and 
ruling the internal control performed throughout a net of Internal Audit Units. 
· The existence of a Supreme Control Body, under technical and financial Congress 
dependence, becomes necessary. Its mission is the ex-post control about the State’s 
resources employment, the economic and effective assessment of public sector 
activities and their achievements. 
 
These are the main features of the Sindicatura General de la Nación (SIGEN): 
 
1. SIGEN is an entitywith administrative and financial autarchy, which directly reports 
to the President. 
2. The Síndico General de la Nación (General Comptroller) and three Deputy Síndico 
General, all of them political appointees, head it. 
3. It is defined as a normative, supervisory and coordinating Body. 
4. The Higher Official in every jurisdiction or entity will be responsible for the 
sustenance of an adequate internal control system. 
5. Among SIGEN functions the following ones can be mentioned: 
· To issue and apply the internal control rules. 
· To issue and supervise the enforcement of the internal audit rules 
· To guide the program, project and operational assessment. 
· To report to the President the facts that may cause severe damage to the national 
wealth. 
 
Each Internal Audit Unit reports to the highest authority of its jurisdiction and it acts 
under the technical coordination and supervision of SIGEN. The responsible for the 
maintenance of an adequate internal control system is the above-mentioned highest 
authority. The internal control model applied must be integral and integrated, with regard 
to budget, economical, financial, assets, normative and management issues, plus 
program, project and operational evaluation. This system implies that ex-ante and ex-
post controls tools have to be integrated in the organization’s and internal audit’s 
planning, rules and procedural handbooks. It must be pointed that the new instrument 
had left a gap on functionaries’ responsibility (a sort of accountability). One of the 
problems faced is that the Internal Auditor does not always interact at the level required 
to make his/her opinions heard in the decision locus neither is recognized as a reliable 
advisor by the political authorities. The system shows itself as of limited aptitude in 
order to follow policies33. 
 
During the first years after the enacting officers were devoted to, among other goals, to 
develop its General Internal Control Rules34 and to ground the basis of internal control 
in the field. During 1998, almost five years after the law was enacted, the General Rules 
deeply rooted in the principles stated by the Internal Control Integrated Framework 
(COSO)35 were published. Control is concerned with means as well as ends. The control 
model adopted was pursuing explicitly36: 
 
 19
· “To improve within the public sector a control environment as an expression of a 
cultural change based on accountability, ethics and transparency.” 
· “To evaluate if performance was done according the 3Es principles, within a legal 
context...” 
· “A value added performance, better timing in the decisions and timely corrective 
actions...” 
· “To generate a useful, complete, trustful and timely information system to be of 
assistance for the President”. 
 
Until the Act 24156 was promulgated, control performed by the Tribunal de Cuentas 
could be characterized as a formal compliance with law and governmental accounting 
standards. This law proposed a shift around in which the organization’s history and 
culture have an important role to play. But, the point is if a change is possible when the 
entire system is in the middle of a radical revision and mainly when it is culture what has 
to be modified. As long as Control Environment depends strongly on the factors that 
compose it, it will be as good, fair or poor as they are. Predominating organizational 
culture determines what actually happens, and which rules will be followed, bent or 
ignored. In all these years no special measures have been taken to address these cultural 
aspects. 
 
Other control environment factors to take into consideration are: management’s 
philosophy and operating style and the way management assigns authority and 
responsibility, and how it organizes and develops its personnel. In the proposed model 
everyone in the organization has responsibility for internal control and must be prepared 
to face it. But when the entire system is under downsizing and no specific human capital 
policies are been implemented, the adoption of such kind of measures seems hardly ever 
possible. 
 
The effectiveness of internal control must be undoubtedly associated to integrity, 
commitment to ethical values, and competence of the people who perform it. Conspiring 
against these preconditions were (still are) a society where the rule of law is not a high-
appreciated value, a system where competence and merit are not preferences for career, 
instead nepotism and clienteles are. Within an administration that has as its historical 
behavior doing just what is ruled as much as avoiding new paths, the superior officials 
were asked to play the role of managers (focusing on achieving ends) and administrators 
(focusing on the means being used) of public services oriented to the users. Once again 
the main question arises: if the State was in suitable conditions to carry out the 
transition, regarding its human capital and administrative values. 
 
As in many other Argentina’s bodies the frequent change of authorities and the 
consequent changed profile to perform the duties had an impact in the organizational 
performance. In ten years there have been 8 Síndicos Generales (one just nominated 
but then no confirmed), the first four graduates from the Economic Sciences, the 
following three were lawyers and the last one also in economics. Is this relevant? We 
will see. The changing profile has meant a change in the control approach under the 
same legal instrument, as long as the model didn’t have time enough to be consolidated 
and the long standing tradition of giving a personal touch to the public function. During 
the first six years, the control activities really performed were towards financial and legal 
 20
compliance, limiting in some way the control performed to compliance audits, but the 
operational audit was mentioned very often. The difficulties for rooting the model are 
associated with the deep changes involved not appropriately addressed and the lack of 
interest authorities showed on internal control matters. 
 
 
The actors 
 
1984-1999 
 
SIGEN is the legal continuity of the Sindicatura General de Empresas Públicas (SIGEP): 
the former external and concomitance legal, financial and managerial control of publicly 
owned enterprises. The first Síndico General (Alberto Abad) headed before the SIGEP 
and was an active player during the legislative treatment of the Act 24156. SIGEP’s 
people constituted mainly SIGEN’s staff; they were specialized in external control in an 
administrative environment ruled by laws of private sector application, and organized 
more as private enterprise than as central administration. All these aspects made out the 
necessity to be trained in the new vision and be familiarized with Central Administration 
management. The first times of the new entity were dedicated to examine the “business” 
of the areas under control and the control performed was based on financial and legal 
compliance. The training on the new model was basically in charge of the Canadian 
Comprehensive Audit Foundation (1993-1994) when an ambitious program was 
implemented. But three E audit was not so easy to root, also the idea of internal control 
as advise and so, mainly the audits performed were dedicated to compliance (financial 
and legal). Mr. Abad’s contribution to define the model implementation was decisive 
but he resigned to take other responsibilities within the Executive just two years after the 
enacting. 
 
His successor (Héctor Agustini) was at that time one of three Deputy Sindicos, and his 
previous position as member of the Tribunal de Cuentas is not a minor detail. The 
control orientation toward compliance was maintained and the internal control concept 
was under analysis once again. During his term the Internal Rules were approved and 
aftertwo years he resigned. The Internal Rules took five years to be approved and the 
change of the Síndico General delayed its diffusion and factual application thereof. 
 
Following the reformed Constitution (1994) and the state Reform II, SIGEN defined its 
role in 1997as37: 
· promoting organizative structures adapted to institutional needs, with a defined 
command chain, an effective function separation with primary allocation of 
responsibilities due to clearly established actions; 
· implementing an administrative responsibility regime for the officials, including both 
management and results (so is accepting the absence of one); 
· enhancing the control environment on jurisdictions; 
· reporting and advising the Executive; 
· detecting problems and proposing its solutions; 
· tending to excellence in public management and control; 
· being a technological and doctrinaire referent on internal control matters in Argentina 
and Latin America. 
 21
 
The tools chosen to promote changes in order to achieve the 3Es plus transparency in 
Public Sector were: integral and special audits, technical assistance to Internal Audit 
Units and technical diagnosis of the Executive entities. The diffusion of the internal 
control concept among the managerial performers was never undertaken. So, the internal 
control became more related to Administrative Directors (and administrative procedures) 
than to high level authorities (and policy implementation) , limiting its scope and impact. 
 
The third Síndico General (Cristina Benzi) came from a Legislative Bicameral 
Committee dedicated to the Accounts Revision. She was a year on charge, until the new 
administration arrived and during her term no main changes were adopted. 
 
2000 - 2002 
 
During President De la Rua administration, the professional profile required to be 
Síndico General was widened from exclusive professionals on Economic Sciences to 
lawyers among those eligible but maintaining an experience’s requisite in administrative 
management and audit of 8 years, and the modification was presented in a section of the 
Ministry Act38. The designated lawyer (Rafael Bielsa) didn’t meet with the experience in 
Financial Management and Audit required by law. During his period SIGEN 
experienced important changes in its internal organization and it was approved the first 
strategic plan. A vast personnel movement was implemented and it implied everybody 
coping with new matters to manage. The main features of the strategic plan were 
strengthening high direction systems (integrated by something named Techno-political 
Processing System, Strategic Planning, Accountability and Managerial Operative 
Programming and Control System). The Plan established a SIGEN’s certification, and it 
was defined as the set of rules that established evaluation criteria for the internal control 
system. The intended aim was the improvement of processes associated with the 
Program Agreements set forth in the Act 25152 and with external financial aid. Another 
distinctive attributes of the Plan were the idea of passing a rule in order to punish those 
who didn’t provide complete and timely information, the establishment of 
Accountability procedures, and the institution of an Integral Internal Control System for 
the entire Administration. None of these measures was implemented; none of them 
passed the ideal level due (among other reasons) to the abbreviated administration of 
President De la Rua. During this period it became a fashion to endorse SIGEN the 
compliance verification of administrative orders such as entrance time, use of cell 
phones and official cars, etc. The Action Plan 2001 included a large number of the so 
denominated performance and results audits; a real curiosity given the fact that no 
performance or results management was performed. During this period it was approved 
the voluntary separation of 50 % of the top managerial staff. Those positions were 
fulfilled mainly by professionals who didn’t meet the suitable requirements and depend 
of political or personal support to maintain wide wage differentials. The way adopted by 
Mr. Bielsa to manage the human capital, beyond the approved rules and regulations, 
could be considered as a serious threat to the auditors’ independence. 
 
A significant change followed to this experience. In January 2002 it was designed as 
Síndico General de la Nación a well known administrative jurist: Rodolfo Comadira. His 
idea of control was absolutely biased to legal aspects, neglecting the managerial ones. A 
 22
study on the Title VI of the 24156 Act was published by SIGEN in April 200339 and 
some of his thoughts on these matters are stated there. They illustrate fairly good how 
constrained they were. In the page 58 one unidentified commentator says:“... only the 
strict rules observance can drive to ensure that management is based on economic, 
efficiency and effectiveness criteria in the attainment and allocation of public resources.” 
In page 67: “... Never an adequate management can be, pursuing efficiency and efficacy, 
in the wrong way with legal acceptance. The equation is inverse: only the strict 
normative observance can drive to ensure that management is based in economic, 
efficiency and efficacy criteria...” Despite all advocacy to legal aspects, during Mr. 
Comadira period, the prior violations to normative aspects in human capital 
management were sustained. 
 
After the distinguished administrative jurist another two Síndico General were 
appointed, none of them met the experience required by law. The first one performed 
his duties for a 13 months period on office and the second just one month. No major 
modifications were impressed to the control orientation. For the time being, no Síndico 
General de la Nación is in charge and the model performed, definitively oriented towards 
compliance, is still maintained. 
 
 23
Section 4- Conclusions 
 
 
The reform issues have been present for 17 years in the national agenda, the strength and 
the approaches used to provoke changes have been variable. The most remarkable 
outcomes belong to President Menem period, because a deep state reform was 
performed and public management was redefined to keep the pace to that reform. But 
the attempt made during President De la Rua deserves a special consideration as an 
authentic paradox: his project was formally perfect and his administration was a 
paradigm of ineffectiveness, administrative weaknesses and indecision. Why such a 
divorce between normative and facts? Politics explain just a part of it, the rest remains in 
the personal standpoint. 
 
Was the state reform in Argentina successful? Yes and not. The answer depends on the 
perspective adopted for evaluation. It was very ambitious and outcomes were not all 
achieved. State has definitively changed, but the controversial way in which it was 
managed ensured the current discussions about their costs and effectiveness. The work 
done to put it on regime was radical and might be well intentioned, but autocracy and 
precipitation conspired against both its public image and outcomes. The maintenance of 
policies throughout different administrations is not common: public policies are 
unpredictable and unstable, they mainly respond to opportunity. The practice is to 
change everything the predecessor has made: our times are always foundation ones. It 
also has to be admitted that as long as the changes are made following paradigms, 
ignoring criticisms and in a very fast way, there is no room to make corrections in the 
direction adopted. Another real problem is that State has not the capacity to enforce its 
legislated policies and this fact conspires against its credibility and success. One thing is 
what is written (acts, decrees, rules) and a very different one what is performed.In order to characterize the reforms, these are some conclusions. 
 
· Society accompanied the state reform process and the idea of success was present. 
Political and economic stability were strongly appreciated outcomes. A certain kind 
of governance was assured, despite all the mess, and it was proved in January 2002. 
· The policy choices adopted, more reliant on market forces, respond to political needs 
and fiscal reality, and the lack of different ideas to overcome the severe crisis. They 
followed the world successful tendencies, framed in the Washington Consensus. 
· Privatization was inevitable. Publicly owned enterprises will no longer survive 
without important capital injections and managerial updates. A broken State was not 
in conditions to offer the services needed. 
· A regulatory frame was established by the 1994 Constitutional reform. 
· The favorable conditions that the state reform produced drove to an undeniable fast 
country’s modernization and also to unbalanced social growth. 
· Among the most criticized features are those associated with lack of transparency and 
corruption suspicions over the privatization process. Other strong criticisms are 
addressed to the lack of social support to those affected by the reform process. 
· Political interest drove many of the stages of the process and technocrats “negotiate” 
political support with a blind eye on administrative mismanagement performed by 
political and high administrative levels. 
 24
· The reform episodes began with a strong political need and the outcomes attained 
depended strongly on the implementation process, due to the divorce between facts 
and proposed rules. 
· Structural weaknesses were never confronted. 
· The public management policies adopted comprised expenditure planning process 
and financial management, civil service and labor relations, procurement, 
organization and methods and audit and evaluation. 
· It is a “before and after” time in Financial Management aspects: Central 
Administration will not be the same due to technological changes and the systems 
implemented, and also due to the important human capital loss. 
· The expenditure planning process, despite formal aspects, is still far from being a real 
allocation of resources and results. 
· Procurement processes were enhanced at the beginning, but late modifications 
intended to emphasize transparency and control contributed only to their 
bureaucratization. 
· Audit issues were addressed in a modern way, but they are far from being what is 
needed to improve performance and getting results. Evaluation is still a pendent 
matter. 
· Regulatory authorities constituted new organizations that follow many administrative 
aspects of private sector, such as the labor relations regime. They were conducted in 
many cases by the same persons who had run the privatization process; mainly no 
regulation was really performed. 
 
Public administration is characterized in Ricardo Gutiérrez40 own words as deficient in 
its capacity to design public policies and to manage effectively and efficiently. Among 
the principal critical points he pointed the following may be mentioned: 
 
· lack of definition at national, estate and local responsibilities levels on social issues 
and services; 
· institutional weakness in policy-making areas; 
· lack of coordination, at ministerial level, of similar activities; 
· poor efficiency in public management, specially in social programs and those 
dedicated to improve work generation; 
· lack of political will and appropriate mechanisms to adopt programming and 
management control; 
· persistence of bureaucratic behaviors that provoke inefficiencies and facilitate 
corruption; 
· administrative structures and budget programs that duplicate or overlap functions; 
· unmotivated and bureaucratized personnel; 
· poor IT development; 
· lack of transparency in procurement processes. 
 
Years later, facing unwanted results (unemployment, industrial weaknesses, very heavy 
public debt in default) mainly derived from the inadequate fiscal management among 
other political conditions, the state reform is severely questioned by many sectors of 
society, that had earlier enthusiastically supported. The privatized services that provide 
improved basic services are today questioned both about its price as its quality. Many 
 25
ideological interest are going around these issues but the real fact is that trust between 
government and citizens is almost extinguished. 
 
Then, what had failed? There are many factors to mention. The processes that create 
policies are central at the time of explaining the failure. Spiller and Tommasi in an 
exhaustive analysis41 on the topic argue that “the characteristics of public policies in 
Argentina are the outcome of a non-cooperative behavior in the policy making game” as 
“product of institutional instability and institutional rules that negatively affect the 
expectations and horizons of the actors involved in the policy process”.... “All of this 
leaves an under-institutionalized national policy making arena populated by transient 
political actors who tend to behave myopically, and who do not build long term policy 
agreements”. 
 
From a more restricted, operational and biased own point of view, another factors have 
to be pointed out. A cultural one: the superficiality with which reforms (as other 
policies) were faced: for many people a mere statement seems to be enough to get 
results and managerial aspects are usually subordinated to partisan conditions. State 
reform was adopted as a political tool to let aside political and economic instability, but 
once the risk disappeared things try to return to the well known paths. 
 
A cultural and managerial aspect should be mentioned: improvisation as strategic 
approach. To the emergency issues common to the crisis that provokes the reform, a 
national style of behavior (or misconduct) based on improvisation rather than rational 
programming leads the processes. 
 
Among the managerial aspects: people are a key aspect to be considered in any social 
process. If you treat human resources just like numbers and forget to take into account 
their experience, skills, profiles, motivation, management, values, no success is possible. 
It is people who made the difference and its professional management was an absent 
issue (despite what has been instructed). 
 
The withdrawal of State was made in an unorganized and precipitated way. Maybe it 
was our only possible way. The reform process results in a weaker, a little smaller but 
not less expensive State and impoverished in its human capital and values. Many of the 
functions to be performed as those related to regulatory aspects were mismanaged. For 
those belonging to the political arena involved in the policy making process the idea of a 
stronger, powerful State is commonly associated with a bigger one, not with one more 
efficient and effective. These two words are associated to the 90’s (a bad word at this 
moment). It must also be pointed out the ignorance of political authorities and its teams 
on the matters they have to rule, their subordination to particular or partisan interests 
and their lack of commitment with effectiveness. 
 
What happens with institutional control? Enacting of the Fiscal Responsibility Act 
costs to Central Government $A 108 millions given as debt forgiveness to provinces 
reluctant to sign. Congress is now discussing the approval of full powers (called “super 
powers” by the press) to Cabinet Chief to manage the entire allocation of 2005 Public 
Budget. The present administration had issued the largest amount of emergency decrees 
in history, and they have a favorable Congress. The strong presidencialism is endemic 
 26
and all Presidentsplay this game. Control was not, is not and will be not an issue of real 
interest. It is a forgotten matter, strange to our social and political habits. 
 
Internal control matters followed the changes produced in political authorities in charge 
of it and the human capital management policies applied didn’t contribute to its 
enhancing. As long as bureaucracy is so firmly tighten to continuous political changes, 
the probabilities to strength the conceptual frame and its applications are remote. The 
role of internal control was never firmly rooted as Act 24156 states and it becomes a 
hollow voice. There was not a firm strategy to its enforcement: in the first times it was 
due to the necessity of adapting to new context and then, to the forever changing 
political scenario. Technical and organizational aspects are subordinated to political 
ones: a Body that has to be essentially a technical and independent reference adapts 
itself to what is supposedly a political point of view. 
 
The main reforms to be faced in order to accomplish the goal of a modern and effective 
State, serving its citizens, must be addressed to: 
· strengthening of institutions; 
· strengthening the policy making, programming and control capabilities; 
· strengthening the civil society role; 
· increasing transparency in government operations; 
· enhancing public accountability; 
· modernizing public management practices, with special emphasis on human 
resources, procurement and control enhancement; 
· improving the quality of public expenditure; 
· redesigning the Executive Branch organizational structure, rationalizing it to functions 
to be really and full performed. 
 
In Argentina major state reforms were legislated and to a great extent performed. They 
haven’t brought all the renovation and benefits foreseen but in a contra factual exercise, 
it is an unpleasant idea to think of Argentina without those reforms. They were 
desperately necessary and many advances were made. Public management conditions 
didn’t give full support to the process. The reasons of failures are deeply rooted in us. 
We were for many years under the umbrella of a welfare state. Change always generates 
resistance and nostalgia. This is worsened when a severe crisis is present and those who 
need assistance just found attributive blames. The reform momentum seems missed but 
it will always be room for a magical appeal: we are responsive to them. How long and 
proper the reforms will continue is an aspect this paper is not able to appraise. 
 
 
 
1 García, M. E.1999a. “The Recent Experience on the Search of the New Public Administration in 
Argentina”- IIAS Conference, Sunningdale, UK and García, M. E. 1999b “Trying to Root a New Model of 
Internal Control in Argentina: The Role of a Training and Professional Developing Center”- International 
Association of Schools and Institutes of Administration- Birmingham, UK. 
2 In De la Rua administration just 120 days. 
 27
 
3 At this time (September 2004) that condition is putting in doubt after replacing President and Directors 
by professionals with no experience in the monetary field 
4 September 2003 
5 National Reorganization Process 
6 Heymann, D. and Navajas F. 1989 - “Conflicto distributivo y déficit fiscal. Notas sobre la experiencia 
argentina, 1970-1987”. Desarrollo Económico, 115:309-329 
7 In 1989 the Consumer Prices Index variation was 4.923.3% 
8 O’Donnell, G. 1989 - Argentina, de nuevo - Working Paper #152, Kellogg Institute 
9 Beltrán, G.- “ Justificación e inicio del proceso de reformas estructurales de los años 90”- Epoca, Revista 
Argentina de Economía Política. Año 1, Diciembre 1999. Available at http://www.epoca.step.net.ar/ 
10 García, M. E. 2001- “Unmasking Facts: Modernization, New Contractual Responses and Human 
Capital in the Argentine Public Sector” - IIAS Conference, Athens 
11 O’Donnell, G. - Delegative democracies? - WP# 172, Kellogg Institute Available at 
www.nd.edu/~kellogg/WPS/172.pdf 
12 State Reform Act (Law 23696) 
13 “Reflexiones sobre la experiencia argentina” in Proceedings of the XXIII International Seminar on Public 
Budget, Buenos Aires 1996 (ASAP) 
14 Central Bank rediscounts to provincial banks had enabled the provinces to run up large deficits in the 
past. 
15 The media reflects this opinion: “It was only during the first steps of recovering democracy, 
characterized by civic euphoria, that the political parties, their leaders and the Congress counted with high 
esteem”; La Nación, Buenos Aires (March 7,1999 Section 7 page 5) 
16 Laws 23696 and 23697/ 1989 
17 Law 24629/1996 
18 García, M. E. 2001- op.cit. 
19 Gregorio Badeni mentioning Prof. Linares Quintana in La Prensa (p.19) , August 22 ,2004. 
20 Under a system dating from 1853, while the central government collects taxes, the provinces were 
guaranteed an automatic share of the revenues. That gave them no incentive to spend more efficiently. 
21 Fondo de Reconversión Laboral del Sector Público Nacional 
 28
 
22 Increased inequality in income distribution, questioned independence of judicial system and quality of 
public expenditure were the issues on discussion. 
23 VI CLAD Congress, Buenos Aires, November 2001 
24 Internal Control Authority 
25 Makón, M. 2000 - “Un nuevo marco de gestión para incrementar la calidad del gasto”- Revista del XIV 
Seminario Nacional de Presupuesto Público - Asociación Argentina de Presupuesto y Administración 
Pública (155-174) 
26 The quality and seriousness of this discussion is still undetermined, according the actual situation. 
27 July 15th., 2001 
28 “Evaluation Report on the Role of the IMF in Argentina IEO, 1991-2001” press briefing July 29, 2004 
Washington, D.C. available at www.imf.org 
29 Nicolás Fernández, President of the Energy and Fuels Committee , La Nación, August 12, 2004 
30 This paper limits its scope on control, addressing internal control issues. In this section will be followed 
arguments introduced in Garcia, M. E., 1999 a,b op.cit 
31 Ley de Administración Financiera y de los Sistemas de Control del Sector Público Nacional (Ley 
24156). Texto y reglamentación compilada por SIGEN. Buenos Aires,1997 
32 Ley de Administración Financiera, op.cit 
33 Petrei, H. 1997- “Presupuesto y control - Pautas de reforma para América Latina”- Interamerican 
Development Bank p. 248 
34 “Normas Generales de Control Interno”, 1998. Sindicatura General de la Nación, Buenos Aires. 
35 “Internal Control Integrated Framework”,1992. Committee of Sponsoring Organizations of the 
Treadway Commission (COSO)-AICPA 
36 Agustini, H. L., 1997 -“Fundamentos del nuevo modelo de control interno en Argentina”, III Encuentro 
Nacional de Control Interno, Manizales (Colombia) 
37 SIGEN’s Vision, Mission and Objectives - Version 30-07-97 
38 Act 25233/1999 
39 Ley 24156- Ley de Administración Financiera y de los Sistemas de Control del Sector Público Nacional 
- título IV “Del Sistema de Control Interno” Texto institucional anotado, comentado y concordado. 
SIGEN, Abril 2003 
 29
 
40 Treasury Secretary during Dr. Cavallo first period in office as Economy Minister. Excerpt from : La 
Reforma del