Critical analysis of the fiscal rules for ensuring the sustainability of sub-sovereign debt in Argentina

The Córdoba case 2016-2020

Abstract

https://doi.org/10.1590/2179-8966/2026/89807

In 2016, Córdoba became the second city of South America in issuing a bond on the international capital market. Despite Córdoba have complied with the legal requirements for such an issue, its debt became unsustainable and had to be restructured in 2020. This was not an isolated case, but similar to that of other 12 Argentinean provinces. The article critically analyzes the safeguards provided in the Argentinean legal system for avoiding over-indebtedness processes in light of the dynamics of Córdoba's external debt 2016-2020. It shows that the safeguards in force did not activate any alarm that could alert of the existing default risks. The paper argues that this result is rooted in the fiscalist conception of the indebtedness upon which these safeguards are based, which, among other things, makes invisible the differential nature, costs and risks of internal and external debts, avoiding, from there, to diagnosis and planner adequate solutions to prevent or solve unsustainable events.