74 provincial level (although the federal government spends substantial amounts on the universities; see table 12). Health services are equally split between the federal government and the provincial and local governments. Social security and labor support programs are mainly at the federal level.

The principal question about spending would appear not to be whether there was any major expansion in recent years, but whether the levels inherited from the past have been excessive in certain categories. To obtain a sense of where spending might be disproportionate, it is useful to compare the spending profile to those of other Latin American countries. Table 14 shows total, primary, and interest spending at each of the three levels of government (central, provincial, local) for Argentina, Brazil, Chile, and Mexico. Key distinctive features of Argentina include the following. First, the share of provincial and local spending in total primary spending is unusually high for Argentina, standing at about half (48 percent) of the total. This is considerably higher than in Brazil (41 percent) and far higher than in Chile (9 percent) and Mexico (32 percent). Brazil’s former difficulties and recent successes in getting control of state and local spending are well known. The profiles in table 14 suggest this challenge is even greater for Argentina. This is especially true given the recurrent pattern in which the central government in Argentina assumes the debt incurred by the provinces.

A second pattern is the high share of interest in total spending. Whereas interest accounted for over 5 percent of GDP in Argentina in 2001 before falling to 2.6 percent on a cash basis in 2002 because of the default on much of the debt, interest payments were only 2.7 percent of GDP for Mexico and 0.4 percent for Chile. Only Brazil shows a comparable interest burden, at 4.6 percent of GDP.

deficit of only 2.5 percent of GDP there should have been total revenue of 26.6 percent of GDP. As revenue at the federal level only accounted for 17.8 percent of GDP, this implies that provincial ownrevenue (i.e. excluding revenue-sharing receipts) provided the remainder of 8.8 percent of GDP. But Cuevas (2003) places provincial own-revenue at only 3 percent of GDP. So there is an unexplained gap of 5.8 percent of GDP between spending and revenue at all levels. The likelihood is that spending is overstated, rather than that revenue is understated. In particular, IMF staff estimates reported in Krueger (2002) show a significantly lower level of consolidated spending than in the Ministry of Economy data. In table 4 above the IMF estimates place total spending in 2001 at 25.0 percent of GDP, whereas the Ministry of Economy data place the figure at 35.7 percent of GDP (table 14 below). The IMF data exclude spending at the municipal level, which is about 3 percent of GDP. Even after adjusting for this difference, the IMF spending estimates are about 7.7 percent of GDP lower than the government estimates. It is possible that the government estimates of consolidated spending double count revenue sharing in both federal and provincial spending. In particular, in the accounts presented by type of payment (e.g. wages, transfers), federal spending is reported at 18.6 percent of GDP, but 5.2 percent of GDP of the total is in “transfers to the public sector,” mainly revenue sharing (MECON, 2003d). This would seem to leave spending at the federal level itself at only 13.4 percent of GDP, yet federal spending reported by function (table 13) stands at 15.1 percent of GDP. In any case, it should be kept in mind that the combined spending estimates for the federal, provincial, and local levels in tables 13 and 14 may be overstated.