The process of Structural Adjustment Reform in the Argentinean Provinces. The Case of the Provincial Reform Loan

Abstract

The process of Structural Reform in Argentina began during the late 80s, but this attempt was not replicated in Subnational governments until 1995. This was made possible thanks to the sponsorship of the first World Bank (WB) loan addressed to the Argentinean provinces: the Provincial Reform Loan (PRL). The present work proves that, despite the first years’ enthusiasm and voluntarism, the PRL showed disappointing results compared to the initial aims of reform. Most important, the analysis carried on proves that the PRL loan was not as successful as the WB evaluations suggested. A closer study of the problems affecting the PRL’s performance suggests that there are clue design insufficiencies in this loan, which are a common denominator in most Adjustment operations, the most important of which was the lack of long term sustainability of the reforms. In such a way, a proposal was put forward so as to remedy this insufficiency and improve Structural Adjustment lending performance, which links loan’s disbursement on past loans’ outcomes. Under this new scenario, provinces are encouraged to maintain the reforms so as to be eligible for future loans, extending their horizon of action and improving Adjustment lending overall performance.