llars at the fixed relation of 1:1, or they can contract in foreign currency.Another important area of reform is the pension fund system: optional private pension funds were introduced, where contributors become stakeholders in an investment fund managed by private operators. While over time this will become an important factor for increasing the saving rate of Argentina and is expected to offer recipients reasonable retirement benefits, this change of course does not by itself solve the problem of the pensioned people and of people approaching their retirement age. However, important improvements have been introduced, by increasing the retirement age and by capping the pension benefits. Nevertheless, this is a politically sensitive area the government finds most difficult to control. At present, a very significant portion of the national budget is being spent on benefits for the aged. As things are, it will probably take a decade before the combined effects of people opting for the private scheme, the higher retirement ages and the natural attrition of the number of present pensioners will lighten this burden on the national budget.The fiscal policy of the Government is trying to keep receipts and expenditures more or less in balance. On the expenditure side, apart from the benefits derived from the privatization program, the Federal Government has been reducing the number of staff employed as well as pushing as many services as possible down to a state (provincial) level, where it was hoped they would be carried out more efficiently. So far, this appears not to have worked as intended, as most provincial administrations continue to be very weak. On the receipts side, tax collection efforts have been stepped up and a tax reform has been enacted. Periodically, the downturn of the economic cycle has negatively impacted the tax receipts. During 1998, the tax on fuel was stepped up and the marginal rate for the income tax has been increas...
