Transcript of meeting of the Executive Directors of the Bank and IDA, held on Tuesday, January 24, 1995 : Argentina - Provincial Reform Loan Project

STRICTLY CONFIDENTIAL nm 1 NM INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION Tuesday, January 24, 1995 Washington, D.C. The meeting of the Executive Directors was convened at 10:05 a.m. in the Board Room, 700 Eighteenth Street, N.W., Washington, D.C., Mr. Lewis T. Preston, Chairman, presiding. MILLER REPORTING COMPANY, INC. 507 C Street, N.E. Washington, D.C. 20002 (202) 546-6666 STRICTLY CONFIDENTIAL nm 2 C O N T E N T S 1 Proposed Loan Argentina (Provincial Reform Loan) 3 Ms. Cordeiro 6- Mr. de Paiva 12 Mr. Stanton 14 Mrs. Herfkens 15 - Ms. Piercy 17 Mr. Fischer 17 Mr. Bugrov 20 Mr. Autheman 21 MILLER REPORTING COMPANY, INC. 507 C Street, N.E. Washington, D.C. 20002 (202) 546-6666 STRICTLY CONFIDENTIAL nm 3 MR. PRESTON: Good morning, ladies and gentlemen. I believe this photogenic group represents a quorum. Item one is a proposed loan in the amount of $300 million U.S. equivalent to Argentina for provincial Reform Loan Project. We are pleased to welcome Mr. Kreis of the IMF who is attending this meeting. Mr. Hagerstrom of the Latin America and Caribbean Region will introduce the proposal. Mr. Hagerstrom. MR. HAGERSTROM: Thank you, Mr. Chairman. The spillover effects of the mexico crisis have given even greater urgency for the Argentines to press forward with the government's agenda of consolidating structural reforms and reinforcing fiscal discipline. The reform of provincial governments, which are expected to account for almost two-thirds of public expenditures by 1996 and are now major providers of social services and infrastructure, is a major element of this agenda. The proposed provincial reform loan is expected to have important direct benefits for the eight participating MILLER REPORTING COMPANY, INC. 507 C Street, N.E. Washington, D.C. 20002 (202) 546-6666 STRICTLY CONFIDENTIAL nm 4 provinces, as well as improving the overall fiscal situation. We also expect further benefits to be realized from establishing a mechanism, the Transformation Fund, for supporting reforms in other provinces. Over the medium term, we hope that this move to encourage and reward successful reforming provinces will set the stage for encouraging other provinces to undergo adjustment. The prepares loan has long been s~en as a central part of the structural reform process in Argentina, being supported by the Bank. Adjustment lending remains appropriate in the case of Argentina, particularly in light of the current situation in international capital markets and the fact that the Argentines operate a currency board system under the convertibility law. The design of the proposed loan builds upon the lessons learned and institutional capacity developed at the federal level under a series of recent Bank adjustment operations. To ensure the full commitment of provincial governments, including legislative bodies, the legal framework for required reforms has largely already been put MILLER REPORTING COMPANY, INC. 507 C Street, N.E. Washington, D.C. 20002 (202) 546-6666  STRICTLY CONFIDENTIAL nm 5 in place. Further, the operation has been designed with substantial flexibility, recognizing that the primary goal is to reform provincial finances and set the stage for improving the internal dialogue on more fundamental improvements in fiscal federalism and the accountability of local governments. Finally, the provinces will be able to tap into the extensive experience gained by the federal government for the technical and administrative demands for implementation. The Japanese Export/Import Bank has indicated to the government and the Bank its interest in supporting this effort with possible cofinancing. Such report would allow us to accelerate the program of reform in the provinces. We recognize that the reform of provincial governments is a major challenge for Argentina that will not be achieved through a single operation. Indeed, the authorities may be considering an acceleration of provincial reforms in the near future. As noted during the previous CAS discussion, we will also seek to leverage our future investment lending to - the provinces and municipalities via investment lending both MILLER REPORTING COMPANY, INC. 507 C Street, N.E. Washington, D.C. 20002 (202) 546-6666 STRICTLY CONFIDENTIAL nm 6 to increase incentives for reform and to provide for sectoral reforms in social services and infrastructure. Thank you very much. MR. PRESTON: Thank you, Mr. Hagerstrom. Are there further comments or questions? Ms. Cordeiro. MS. CORDEIRO: Thank you, Mr. Chairman. Argentina has achieved considerable results over the last years. It has done a good job in the reform program and began seeing results. It has reduced inflation; it has improved fiscal performance and growth has resumed. As we had the opportunity to discuss last March when the CAS discussion took place, the focus of the Bank's strategy will be, quote, "on consolidation and deepening of reform, on strengthening of public institutions, on rebuilding physical infrastructure, and on supporting development of the private sector". As we had a chance to say at that time, we agree and support these objectives. The loan before us today falls within the first objective -- deepening and consolidating public sector reform now at the provincial level. But, before getting to the discussion of the loan, MILLER REPORTING COMPANY, INC. 507 C Street, N.E. Washington, D.C. 20002 (202) 546-6666  STRICTLY CONFIDENTIAL nm 7 I would like to focus on the rationale for this operation, one that is of balance of payments support with in fact budgetary support. And today, Mr. Chairman, this discussion is more relevant than a month ago, although from our point of view it was already very relevant last March. The issue is one of competitiveness and consequently sustainability of growth in an open economy. In other words, the currency has appreciated. The ratio of exports to GDP has declined dramatically, and capital inflows have financed the current account deficit. - Then, the question is whether capital inflows are progressively crowding out the production of tradable goods through the appreciation of real exchange. Today, the question might be whether there is a higher need for balance of payments support due to the volatility of the external capital inflows. Although the report before us does not make the case for the need for the balance of payments support, we understand and we guess that there is a clear need for it. This balance of payments support, in fact, which will generate the means to assist the reforms at the provincial level through its counterpart funds is earmarked MILLER REPORTING COMPANY, INC. 507 C Street, N.E. Washington, D.C. 20002 (202) 546-6666 STRICTLY CONFIDENTIAL nm 8 through the Transformation Fund; in fact, this Fund is expected to provide the incentives for undertaking important reforms at the provincial financial level. It is an open mechanism; at least, it is intended as that, I presume to generate some competition among provinces. I would like to raise a few aspects in this context. The first relates to the reform content which in turn brings to our consideration the timing, the opportunity for these reforms and the ability of the federal government, the borrower, to influence such a behavior at the provincial level. Frankly, Mr. Chairman, the report states quite often -- and I quote -- "that the federal government is not in a position to implement major reforms of the co- participated transfers at this time", unquote. Then, we make up for these difficulties by inducing -- and I am quoting again -- "smaller and incremental measures, namely to reduce windfalls in co-participated transfers to minimize discretionary grants and to limit financing of the current account deficit by the provincial governments". Is this enough? We are not sure that this is, in fact, enough for what we want to achieve. MILLER REPORTING COMPANY, INC. 507 C Street, N.E. Washington, D.C. 20002 (202) 546-6666 STRICTLY CONFIDENTIAL nm 9 Returning to the content of the reforms, there are basically three areas that have been identified at the provincial level as crucial for these reforms -- the revenue mobilization, expenditure efficiency and the provincial banking system. I will address them in a reversed order. As far as I am concerned, only in the latter the reform program has a very clear objective and provides the instruments needed for monitoring and assessing performance. In more precise terms, the loan conditionality for tranche release calls for the sale or liquidation of at least four provincial banks. We can see a case for budgetary support as part of the costs to carry out these necessary actions. But here again, is this enough in terms of the actions that we are supporting? In the area of revenue mobilization, we understand that the loan is expected to assist the implementation of the fiscal area. But, the question is, in fact: What are the provinces required to do and by when? I think it would be difficult to assess judgment as it stands in the report on the implementation and on the performance. I presume that at this stage, after having MILLER REPORTING COMPANY, INC. 507 C Street, N.E. Washington, D.C. 20002 (202) 546-6666 STRICTLY CONFIDENTIAL nm 10 maintained a dialogue with the Argentine authorities, we should know what are the provinces that are more likely to come and to be able to tailor the conditions, the package of reforms, towards the characteristics of those provinces and not leaving it, I would say, so open, maybe so flexible. So, I would like to be reassured of the soundness of the reforms, as well as the availability of adequate mechanisms for monitoring performance and assures rewards for those provinces that, in fact, implement the reforms. In the area of the expenditure ef~iciency, again the description of the measures seems to be quite vague and eventually too flexible. However, there is clearly one measure that if, in fact, implemented will have a sustainable impact; I am referring to probably the most difficult and painful measures related to reducing staff. We would appreciate some elaboration what has been the experience in this area and how the proceeds of this loan will be used to support these type of measures. Do we have a clear experience how far the provinces have gone and how they will be able in the current political context and also in the current labor market conditions to be able to implement these type of measures? MILLER REPORTING COMPANY, INC. 507 C Street, N.E. Washington, D.C. 20002 (202) 546-6666 STRICTLY CONFIDENTIAL nm 11 Mr. Chairman, we, in fact, support the reforms in these three crucial areas. We guess that they are the cornerstone of this loan, but we would have liked to have a more upfront discussion of them, to better understand the linkage between these measures and the loan. And foremost, we would have liked to see clearly the handles that will allow the monitoring of the loan content and, more importantly, to follow up the progress in the areas. But, we support the loan and we wish the Argentine authorities success in these endeavors. I would like to take the opportunity to raise a more general issue that comes to mind with this type of loan, and that is if we are going to engage the Bank in supporting in Argentina or in other countries more often these types of operations, which tend to be quite complex, mainly due to the character of involving federal and provincial systems, that we would like to recommend that OED takes a look at the effectiveness of these type of operations in the near future so we can be more assured of the ability to implement the suggested outcomes in the field. Thank you, Mr. Chairman. MILLER REPORTING COMPANY, INC. 507 C Street, N.E. Washington, D.C. 20002 (202) 546-6666 STRICTLY CONFIDENTIAL nm 12 MR. PRESTON: Thank you, Ms. Cordeiro. Mr. de Paiva. MR. DE PAIVA: Thank you, Mr. Chairman. I believe that this is a very good project. It touches the heart of a problem with a direct impact on the stabilization effort developed by the federal government. And I believe that it sets a good precedent for other countries where fiscal federalism prevails. I consider that the Government of Argentina took a very courageous step and I do not underestimate the political difficulties of designing a set of actions such as the one described in the project, but I believe that in a project of this nature, the federal government has to take the lead, has to persuade on a number of occasions provincial states, and I do not think that we should have at this stage all certainties on the part of the provinces. I believe the implementation in individual provinces may set an example that will lead other provinces to follow the initiatives provided for in this project. I have only two comments to make. One on the conditionalities and the other on the privatization of state banks. As far as the conditionalities are concerned, I MILLER REPORTING COMPANY, INC. 507 C Street, N.E. Washington, D.C. 20002 (202) 546-6666 STRICTLY CONFIDENTIAL nm 13 believe that they may be very helpful in this case. I believe that they may give a strong signal to the provincial governments and I do recognize that Argentina has set an excellent record of compliance with agreements with the IMF and with the World Bank in the recent previous years. But, I doubt whether the Bank should have been so strict, taking into account the political sensitivity of the issues involved, as I mentioned before, and taking into account that the federal government has to take the lead, but in a way has partial direct responsibility for some of the actions proposed in the project. As far as the privatization of provincial banks is concerned, I believe that the privatization of banks of the dimension of the provincial banks in Argentina may require larger amounts of resources than the ones projected in this project. And if that is correct, I think that the Bank should not be shy in making available additional cooperation and additional resources to assist the Government of Argentina. I also have a question in connection with the privatization of banks. It relates to the experience of the Bank in the definition of a methodology to evaluate the MILLER REPORTING COMPANY, INC. 507 C Street, N.E. Washington, D.C. 20002 (202) 546 6666  STRICTLY CONFIDENTIAL ,, .......,., nm 14 market value of banks such as the provincial banks in Argentina. Any comments by staff on this issue will be welcome. Thank you. MR. PRESTON: Thank you, Mr. de Paiva. Are there further comments or questions? Mr. Stanton. MR. STANTON: Thank you, Mr. Chairman. I fully support the objectives of this loan. Clearly, it is an important first step towards encouraging fiscal reform at the provincial level, which, if it is not tackled, will undermine what has been achieved at the federal level. I have just got a couple of points. First of all, I was encouraged, of course, to hear this morning that the authorities were considering an acceleration of future reform. And bearing that in mind, I wanted to touch on the matter raised by Ms. Cordeiro in respect of the co- participated revenues. And I did wonder whether the issue, this issue of co-participated revenues, might be reopened in the context of the response that is required in terms of addressing the recent fiscal weakening, the response to the events in MILLER REPORTING COMPANY, INC. 507 C Street, N.E. Washington, D.C. 20002 (202) 546-6666 STRICTLY CONFIDENTIAL nm 15 Mexico. I should be interested to know whether there is any possibility of that happening. And the second point I wanted to raise was in respect of data, which provincial data seems to be something of a statistical black hole in Argentina. I am, of course, encouraged by the conditionality relating to standardizing budget reports. This is important. But, I wondered whether anything more was being done to improve the quality of financial data and reporting from the provinces. Thank you, Mr. Chairman. MR. PRESTON: Thank you, Mr. Stanton. Mrs. Herfkens. MRS. HERFKENS: Thank you, Mr. Chairman. Mr. Chairman, a lot has been said already. I just wanted to say that I think this is a very well-designed project. It provides the Bank with an opportunity to promote fundamental economic reforms aimed at improving the public sector performance. I would only hope, like David Stanton, that this is just the first step towards further decentralization. My concern is that, given the transfers from the central government to the provinces, they still continue to MILLER REPORTING COMPANY, INC. 507 C Street, N.E. Washington, D.C. 20002 (202) 546-6666 STRICTLY CONFIDENTIAL nm 16 constitute the bulk of local revenues. There is a danger that provinces, municipalities remain to be regarded by the central government as sort of executing agencies, while the priorities for public service deliveries are set at the central government level. And that would make it difficult to hold local governments accountable for their decisions. In the context of establishing greater accountability at the local level, there is clearly need to provide sufficient room for flexibility and priority setting at the loc~l level. And in that sense, I hope that in the future gradual relaxation of earmarking of funds or at least bundling into broad expenditure categories will be considered as an integral part of the reform of inter- governmental financial systems. I feel that indeed maybe the time has not come yet because in the Argentina at the local level the relationships are not very strong yet. But, that means that the more reason there is to develop a mechanism for local accountability, and the Bank could support measures which aim at that. Finally, until now in the project only eight provinces are expected to participate in the reform process. MILLER REPORTING COMPANY, INC. 507 C Street, N.E. Washington, D.C. 20002 {202) 546-6666 STRICTLY CONFIDENTIAL nm 17 I hope that the experiences will inspire the others to also join because I think that is very important for a sustainability of the overall process. Thank you. MR. PRESTON: Thank you, Mrs. Herfkens. Ms. Piercy. MS. PIERCY: I simply want to express our very strong support for this project. I think the importance of addressing this serious gap in Argentina's fiscal reform effort is made clear in Mr. Gerber's written statement and comments by colleagues this morning. And I too would join in the question that I think has been directed here to staff about the prospects for meaningful reform in the remaining fifteen provinces and the pace of that. Thank you. MR. PRESTON: Thank you, Ms. Piercy. Mr. Fischer. MR. FISCHER: Thank you, Mr. Chairman. We also support the project which appears very innovative but also, as we have heard, is complex, and the problem for people like me and the Board is sometimes to understand what is written in the papers, whereas the staff MILLER REPORTING COMPANY, INC. 507 C Street, N.E. Washington, D.C. 20002 (202) 546-6666 STRICTLY CONFIDENTIAL nm 18 people have been working with it for a long time and, therefore, sometimes questions come up which may find an easy answer. So, on this basis, Mr. Chairman, I have two or three questions. The first one has to do with the fact that these reform measures in the different provinces are inseparably interlinked and, therefore, it appears at first glance a little questionable to allow waivers of essential parts of a reform package, as it is obviously suggested. Secondly, there is the possibility of switching provinces in case that one province failed to adhere to the proposed measures, and this may lead to a fragmented reform process, as provinces which fail to improve their financial status may continue to rely on federal finance. And thirdly, linking up to what Ms. Cordeiro said when she quoted from the paper, that it appears that the federal government is not in the position to implement major reforms of co-participated transfers at this time, that one wonders why low density provinces are not included as is obvious in Annex 11. And this brings therefore up the question why this is so, and whether flexibility in the selection of provinces MILLER REPORTING COMPANY, INC. 507 C Street, N.E. Washington, D.C. 20002 (202) 546-6666 STRICTLY CONFIDENTIAL nm 19 should not lead to a distorted reform process. And finally, Mr. Chairman, several colleagues spoke out in favor of closely monitoring the province selection and the implementation of the adjustment measures. When I read the objectives of this project, I was reminded of one of the key messages of the Wapenhans Report, if I got it right. First, he pleaded for less complex projects, and he was very outspoken on advocating that the objectives of early projects are very clearly defined because only then can you later on monitor them. And the more complex that things get, and switching provinces here and there, I think we might have potential problems with projects of that type, however, important they may be, particularly in federal states, and I come from a country also of a federal state, to later on monitor and assess the failure or success of such a project. Because by definition, the objectives have to be flexible also. And I think we are dealing with a new phenomenon. And my question is more or less how much this all is in line with one of the major messages that we have all digested of the Wapenhans Report? And lastly, Mr. Chairman, I endorse Mr. Gerber's note and his plea for close and adequate coordination MILLER REPORTING COMPANY, INC. 507 C Street, N.E. Washington, D.C. 20002 (202) 546-6666 STRICTLY CONFIDENTIAL nm 20 between the provincial reform loan project and other ongoing and new projects and operations that are obviously envisaged. Thank you. MR. PRESTON: Thank you, Mr. Fischer. Mr. Bugrov. MR. BUGROV: Thank you. We would like to give our strong support for this project, and I would not like to repeat all that has been said. But, I would like to associate mysel~ with remarks of Mr. de Paiva when he was talking about conditionality included in this operation. I would simply like to know, since it is a very complex project, what is the degree of flexibility that staff envisages in following up on that conditionality both in the selection of the provinces and the area of privatization of public enterprises. Finally, I would also support the remark by Mr. Gerber on the need to monitor very closely. I would be very happy if at some point in time the Board would be informed on the progress of the implementation of this extremely complex and extremely important for Argentina and other countries with federal systems this extremely important MILLER REPORTING COMPANY, INC. 507 C Street, N.E. Washington, D.C. 20002 (202) 546-6666 STRICTLY CONFIDENTIAL nm 21 project. Thank you. MR. PRESTON: Thank you, Mr. Bugrov. Mr. Autheman. MR. AUTHEMAN: Thank you, Mr. Chairman. Like previous speakers, I welcome this project which tries to address one of the weaknesses of Argentina's adjustment which is a weakness of the financial situation of provinces. We are caught between two constratnts, one which is the economic necessity to consolidate the public finance of the provinces in order to strengthen the credibility of the overall process of adjustment in Argentina and the second, which is related to political realism, which is that any attempt to involve ourselves too much in the political reality of a relationship between the federal government and the provinces would probably increase the risk of failure and not the risk of success. So, to refer to an issue raised by several speakers, I would like to ask the following question to the staff. Reading the letter dated December 21, which Minister Cavallo sent to you, it seems that our conditionality is the mere reflection of government intentions. MILLER REPORTING COMPANY, INC. 507 C Street, N.E. Washington, D.C. 20002 (202) 546-6666  STRICTLY CONFIDENTIAL nm 22 If I well understood the project, the reform has been basically designed by the government who is asking the support of the Bank to implement it. If the conditions were set from outside, I think they would be unrealistic. If the detailed conditions had been proposed and agreed, I think we live with them without difficulty. It looks complex, but I think it should not be monitored from outside. I am not concerned with how the details will be implemented. The question ~s whether the federal government and the Bank in their future assessment ·- of the evolution of this program can be satisfied that at each stage the critical mass has been reached. And I don't think that we should try to get too much involved in the details of Argentina's politics. I think we must stick to some relationship of confidence with the government and use the tranche release to assess whether the critical mass, as we try to identify it today, has been reached. So, I am against a detailed monitoring of this program. Thank you, Mr. Chairman. MR. PRESTON: Thank you, Mr. Autheman. MILLER REPORTING COMPANY, INC. 507 C Street, N.E. Washington, D.C. 20002 (202) 546-6666 STRICTLY CONFIDENTIAL nm 23 Let's turn to staff. Mr. Hagerstrom, Mr. Nankani, Mr. Burki. MR. HAGERSTROM: Yes. I think a lot of the questions are directed towards -- they start off in what is the relation between the federal government and the provinces. We have a situation where we have autonomous provinces. This speaks to a lot of issues. The issue of selectivity, the federal government is not in a position to select provinces that participate. That also speaks to the issue of flexibility. We did not want to design a project that locked in certain provinces to meeting conditionality. Maybe the nth province could use that leverage to exact something from the government. So, there are reasons for the flexibility design. Again, we are dealing with democracy here. We are dealing with provinces that have an elected governor, elected legislatures. So that decisions taken, for example, to privatize are not decreed by someone. These are political struggles that have to be fought out in the provinces. And once you have achieved that, which in order to reduce the risk we have had most of these legislative actions upfront, that provides a political commitment for implementing the project. MILLER REPORTING COMPANY, INC. 507 C Street, N.E. Washington, D.C. 20002 (202) 546-6666  STRICTLY CONFIDENTIAL nm 24 For that reason, we feel safe of not having too detailed conditionality and maybe not trying to monitor them too closely because these are very important political decisions taken at the provinces. Again, as to the relationship between the federal government and the provinces, the federal government is not in a position now and will never be in a position to unilaterally change the co-participation law. This is a constitutional democracy. The provinces would have to vote on it. The idea of the project is to at least get us ,,~ moving in this direction, to develop a constituency among the provinces who would favor a system of co-participation related more on the basis of fiscal performance. At this point, the number one push against the government is just to raise the co-participation. There is no constituency for improving the situation at all. And we think this is an initial step and at least encouraging the provinces to improve their administrative system, to be in a position where they feel that they are fiscally good performers so that they can go to the other province and say, look, we have put our house in order; we think we should change the system of co-participation that rewards MILLER REPORTING COMPANY, INC. 507 C Street, N.E. Washington, D.C. 20002 (202) 546-6666 STRICTLY CONFIDENTIAL nm 25 people like us. At this point, there is no constituency for that sort of approach. MR. PRESTON: Mr. Nankani. MR. NANKANI: I would like to add a couple of comments on the question of flexibility and complexity of the project. The project, in fact, seems to be complex because it is attempting to deal with three critical areas in the area of provincial finances and to do so in an initial group of four provinces, while beginning the same reform package in a second group of four provinces. But indeed, as some earlier speakers have noted, the focus of it is on improving resource mobilization, expenditure management and beginning the process of privatizing provincial banks. The flexibility is indeed, given the complex relationship between the federal government and the provinces, seen as providing some degree of strength, in fact, to the sustainability of this reform process. We are encouraged, especially in the recent aftermath of the Mexico crisis, about the intentions of provincial governments to deepen their reforms and we feel that this particular operation, particularly in the support MILLER REPORTING COMPANY, INC. 507 C Street, N.E. Washington, D.C. 20002 (202) 546-6666 STRICTLY CONFIDENTIAL nm 26 it gives to the first four provinces, will encourage others to follow suit more rapidly than otherwise. MR. PRESTON: Mr. Burki. MR. BURKI: Mr. Chairman, just a couple of points. I will pick up from what Mr. Nankani was saying. It is our intention, largely at the request of the various governments in the region, to get involved in the next phase of reform, which would be aimed at promoting reforms in the sub national governments. This is a critical issue for countries of Latin America where reforms have indeed taken place at the federal level but have been somewhat slow in corning at the state and provincial level and, at the request of some major borrowers, we intend to take up these issues and these reform efforts in some forthcoming operations. This matter has been discussed by us in several CASs that the Board has already discussed and will be looking at in the next few months. Just one additional word about the complexity of the project. We do recognize that this is a complex project. We will be strengthening our presence in the field in order to provide adequate supervision for this. But, I just would like to remind the Board of the MILLER REPORTING COMPANY, INC. 507 C Street, N.E. Washington, D.C. 20002 (202) 546-6666 STRICTLY CONFIDENTIAL nm 27 discussion we had on the 11th of January when I indicated, in fact explained at some length, the parallel track approach that we are following in the Latin American region, where we are trying to separate macroeconomic and sectoral dialogue from conditions concerned with appropriate implementation of investment projects. And that particular approach is very much in line with the Wapenhans Report. It will result in simpler projects. MR. PRESTON: Thank you, Mr. Burki. Mr. Stanton had a couple of questions about provincial data and about co-participated revenues as a consequence of Mexico. MR. HAGERSTROM: I believe I answered the question on the co-participation. In terms of the data situation, we realize that we are not in a good situation. We are working this loan with other loans. Perhaps Mr. Levy will have more on the data situation. MR. LEVY: Yes. In the Letter of Development Policy, the Argentine Government has made a commitment to seek the consolidation of the provincial data and the MILLER REPORTING COMPANY, INC. 507 C Street, N.E. Washington, D.C. 20002 (202) 546-6666  STRICTLY CONFIDENTIAL nm 28 publication of this data in the near future. This is a difficult situation, and we will be working in this project in providing technical assistance in the compilation of this data and the consolidation at the national level. MR. PRESTON: Thank you, Mr. Levy. Are there further comments or questions? (No response. ) MR. PRESTON: The loan is approved on the terms proposed . - . MILLER REPORTING COMPANY, INC. 507 C Street, N.E. Washington, D.C. 20002 (202) 546-6666