the Argentine writer José Hernandez (1834-1886) once wrote, ‘the law is like a knife: it does not menace the one who holds it.’
The weakness of the CPMRC is also rooted in the broader institutional weakness of the legislature in the budget process (Rodríguez and Bonevecchi 2004). The partisan mode of designation of external auditors is compounded by the high rate of rotation and limited expertise of the members of the CPMRC who are, to paraphrase Jones et al. (2000) ‘professional politicians, amateur legislators,’ with few exceptions. Unlike their counterparts in Brazil and Chile, Argentine legislators have short-term political horizons as a result of electoral rules based on closed list proportional representation and the overwhelming influence of provincial politics on legislative careers (Jones 2001; Spiller and Tommasi 2000). Legislators’ careers do not depend on their standing in the legislature, but rather on their ability to cultivate connections in the provinces or the federal government. They thus have few incentives to specialize and invest in the legislature’s oversight capacities. Nevertheless, in recent years, several legislators have proposed to strengthen the legislature’s budget capacities through the creation of a legislative budget office.
As a result, formal budgetary rules are often circumvented, if not blatantly violated. The legislature participates in the fiction of control. For example, while the 1992 law allows the executive to modify the budget during its execution only in exceptional cases, budget re- allocations have become the rule rather than the exception since 1997. Annual budget laws have repeatedly lifted restrictions on the executive’s ability to modify the budget during the fiscal year (Uña et al. 2005). The legislature has also failed to establish the committee to oversee executive decrees, as provided for by the 1994 amendment to the Constitution. In August 2006, the executive pushed through a reform of the 1992 law giving it free reign over the budget, a proposal sanctioned by the legislature. The role of the legislature in the budget process is now limited to approve the overall amount of the budget and the level of indebtedness (Díaz Frers 2006). The measure was accompanied by a relaxation of the rules governing the approval of executive decrees, which are now automatically approved unless explicitly objected by the legislature.
In sum, flaws in institutional design are compounded by the broader political context in which the AGN is embedded. Some of the characteristic features of financial governance in Argentina include a broad delegation of budget powers of the legislature to the executive, an ample discretion of the executive in public financial management, a centralization of the budget process in the executive, and a disproportionate recourse to executive decrees to reallocate budget appropriations during the fiscal year (Santiso 2003, 2001a, 2001b, 2001c; Bambaci et al. 2002; Ferreira Rubio 2000). These tendencies are reflected, for example, in the multiplication of off- budget special funds in recent years (Abuelafia et al. 2005). The concentration of budgetary powers in the executive is the result of the legislative delegation of budgetary powers combined with the concentration of fiscal prerogatives in the executive, including through the use, abuse and misuse of executive decree authority (Uña et al. 2005a; Carey and Shugart 1998; Mainwaring and Shugart 1997). This ‘addiction’ to decrees, especially in public budgeting, has outlived Menem to become engrained in budgeting practices under Néstor Kirchner.
Failure of institutional transplant
In terms of approaches to reform, an important lesson from the Argentine case is the failure of institutional transplant. The trajectory of the AGN constitutes a clear case of failure of radical reform and institutional engineering based on the import of exogenous models of external auditing. The external audit model imported in the early 1990s prematurely eliminated critical features of the previous model without replacing them with adequate substitutes. Unlike in Chile, the Argentine bureaucracy was simply not ready for ex-post performance auditing and the abandonment of ex-ante compliance control.