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Law 25.235

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Ratify an agreement signed by current governors and elected governors of the provinces, with the name of Federal Commitment.

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Sanctioned: December 15, 1999.

Promulgated: December 30, 1999.

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The Senate and Chamber of Deputies of the Argentine Nation assembled in Congress, etc., sanction with force of Law:

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ARTICLE 1 Ratifícase, as far as the competence of the National Congress is concerned, the agreement signed by current Governors and elected Governors of the provinces, dated 06 December 1999, with the name of FEDERAL COMMITMENT and as annex I, is an integral part of the present.

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The clauses setting out measures proposals that should be the subject of treatment by the National Congress should be understood only as the right to petition, leaving the institutional powers of the Congress completely safe.

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ARTICLE 2 The single and global amount referred to in article III of the Convention is of a monthly and consistent nature with the provisions of article 4 of the Convention.

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Article 3 Please inform the national executive branch to subscribe to the FEDERAL COMMITMENT that this law is ratified with those provinces that have not yet done so.

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ARTICLE 4 Contact the Executive.

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IN THE SESSION OF THE ARGENTINE CONGRESS, IN GOOD AIRES, TO THE FIFTH DAYS OF THE TWENTY-YEAR MINUTES AND NEW.

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# 25,235 EL

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CARLOS ALVAREZ PASCUAL RAFAEL. . Mario L. Pontaquarto. . Guillermo Aramburu.

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FEDERAL COMMITMENT

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In the city of Buenos Aires, on 6 days of December 1999, at the headquarters of the Federal Investment Council, the Meeting of Governors is held in exercise and elected Governors of the Provinces, with the following attendees:

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GOOD AIRES: Dr. Carlos Ruckauf; CATAMARCA: Dr. Oscar Castillo; CORDOBA: Dr. José Manuel de la Sota, CORRIENTES: Dn. Hugo Perié; CHACO: Dr. Angel Rozas, CHUBUT: Dn. José Luis Lizurume, ENTRE RIOS: Dr. Sergio Montiel; FORMOSA: Dr. Gildo Insfran, JUJUY: Dr. Eduardo A. Fellner, LA PAMPA: Dr. Rubén Marín, LA RIOJA: Dr. Angel Maza, MENDOZA: Dn. Roberto Iglesias, MISSIONS: Ing. Federico Puerta, MISSIONS: Ing. Carlos Rovira, NEUQUEN: Dn. Jorge Sobisch, RIO NEGRO: Dr. Pablo Verani, SALTA: Dr. Juan C. Romero, SAN LUIS: Dr. Adolfo Rodríguez Saa, SANTA CRUZ: Dr. Néstor C. Kirchner, SANTA FE: Dn. Carlos Alberto Reutemann, SAN JUAN: Deputy Governor-elect Dn. Waldino Acosta, FUEGO's LAND: Carlos Manfredotti, TUCUMAN: Dn. Julio Antonio Miranda, and with the presence of the lords: Dr. Federico Storani and Dr. José Luis Machinea, representing the National Elect Government.

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In order to agree on actions concurrent with the attainment of a balanced growth of the Nation and to avoid distortions and adverse effects in the production and employment that generate the high level of indebtedness of the whole of the public sector and the fluctuations in the level of economic activity caused by both cyclical factors of internal origin and by external disturbances, the attendees also confirm the need to promote compliance of the

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1. Transparency of Fiscal Information;

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2. Sanction within the year 2000 of the new Federal Tax Association Act;

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3. Creation of an anti-cyclical fund funded with co-participable resources, similar to that established by law 25.152;

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4. Coordination of public credit and provincial debt systems;

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5. Rationalization and improvement of the inter-jurisdictional tax administration and the establishment and strengthening of a Federal Fiscal Agency.

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In this sense, the present FEDERAL COMMITMENT, which states:

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FIRST: Propose to the National Congress to extend the following laws for two years, provided that the Federal Co-participation Act established by article is not previously sanctioned. 75 inc. 2 of the National Constitution:

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Act No. 24,977.

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Act No. 20,628 T.O. (Imposed to Wins), and its amendments.

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Act No. 23,966 (t. 1997 and its amendments).

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Act No. 24,699 and its amendments.

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Act No. 24,919 (Prorogation of earnings and Act No. 24,699).

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Act No. 25.063.

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Act No. 24.130.

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The same criterion shall apply to any other rule in force at the date of this commitment that creates or distributes taxes between the Nation and the provinces. The treatment for approval by the H. Congress of the Nation of the tax package, the sanction of the National Budget Act for the year 2000, and the whole set of complementary laws necessary for the proper implementation and enforcement of the tax package, as well as the suspension of Article 3 of Law 25.082.

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SECOND: Until the sanction of the law tax-sharing agreement in accordance with art. 75 inc. 2 and the sixth transitional clause of the National Constitution, the mass of funds to be shared under article 2 of Act No. 23.548 and its supplementary and amendment provisions, shall continue to be distributed in accordance with the provisions of Act No. 23,966, 24,130, 24,699, 25,082 and any other rule providing specific allocation and/or distribution of taxes between the Nation and the Provinces.

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THIRD: During the fiscal year 2000, transfers of any kind (tax and specific funds participation) to emerging provinces of Law No. 23.548 and its complementary and modulatory provisions, as well as those of laws 23.966, 24.130, 24.699, 25.082 and any other rule that provides specific allocation and distribution of taxes, are set at a single and global annual level of taxation equal to 1,350 million

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The established number of transfers will be made automatically and daily on a monthly basis, in twelve equal parts during the year 2000 for which the corresponding budgetary forecasts will be incorporated into the budget 2000.

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Provincial jurisdictions may not allocate funds allocated by special laws for specific purposes up to 50 per cent of the value of such funds, which shall not be computed for the purposes of the obligation referred to in article 9 (g) of Law 23.548.

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FOURTH: The resources to be transferred to the provinces during the year 2001, will be the monthly average of what was collected in 1998; 1999 and 2000.

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The Nation will ensure a minimum monthly transfer of 1364 million pesos in the same period.

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QUINTO: The Federal Government, the Governors of the Province and the Head of Government of the City of Buenos Aires will present, for the purpose of providing parliamentary status for its treatment during the year 2000, a bill of federal participation in compliance with art. 75 inc. 2 of the National Constitution in 2000, which responds to a federal sense, in which the whole of the provinces becomes more prominent and responsible in the determination and control of the primary and secondary distribution criteria and the follow-up of the tax accounts (including the debt) of each and every one of them in line with common guidelines determined by law.

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SEXTO: The Provinces and the Government of the Autonomous City of Buenos Aires undertake to promote in their respective jurisdictions, during the year 2000, the dictation of legislation that, according to their own constitutional norms, adopts principles or parameters similar to those established for the Nation by Law 25.152 of Administration of State Resources or Fiscal Solvency, in order to reduce the fiscal deficit, contain public expenditure, self-limiting in the taxation and ensuring the taxation.

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SEPTIMO: The Federal Government, aware of the funding difficulties of some provincial jurisdictions, will implement a programme to enable the extension of the debt deadlines and to achieve more convenient rates for those provinces whose difficulties so justify it, following subscription of individual commitments to reduce the deficit, containment, efficiency and transparency of their expenses, of the sanitation of the provincial and municipal public finances, if appropriate, as well as the commitment to promote the sanction.

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In no case shall this mean the substitution of the debtor or any change in the conditions of the guarantees granted. In the future such a programme will continue under the administration of the Federal Fiscal Agency to be established in accordance with the provisions of this Commitment.

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Until the implementation of the above-mentioned programme, the National Government, through the Trust Fund for Provincial Development (FFDP) and the Bank of the Argentine Nation, together with the private banks that express their interest in participating in this initiative, shall, subject to the same conditions described above, pay the dues to the commercial banks of those provincial governments that operate for the first two years after the signing of this Compromisturo, not less than one year.

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OCTAVO: The Provinces and the Government of the Autonomous City of Buenos Aires agree to establish procedures to enable the wide dissemination of their tax accounts including budget, debt execution and projection of their services with systems that take advantage of the new technology provided by computer networks. To this end, the parties shall request the Chamber of Deputies of the Nation to treat and sanction the Draft Law of the Crystalline State, which was adopted unanimously in the National Senate. In addition, they agree to audit jointly or by independent entities the collection agencies AFIP (Federal Public Income Administration) and General Directorates of Provincial Income, the Government of the City of Buenos Aires, and Social Security (ANSES).

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NOTE: The parties agree to implement within 24 months the tax harmonization between the different levels of government, including the municipalities, respecting the constitutional principles of each province governing this matter.

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Such harmonization should include unique identification keys for taxpayers, data carriers, real estate valuation systems, etc. in order to generate the necessary information in order to control tax evasion, facilitate compliance with tax obligations and seek to lower the Argentine cost, eliminating or replacing taxes that distort the competitiveness and decisions to produce and invest in the Argentine Republic.

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DECIMO: The Federal Government is committed from the year 2000, in accordance with the provisions of art. 1 of Law 24,629 to submit in the most detailed and disaggregated manner possible in the national budget as in the decentralized agencies, the geographical classification of budget allocations allocated to the activities and projects that make up the programmes.

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DECIMO FIRST: The reciprocity between the national and provincial legislatures necessary for the sanction of the laws required for the transformation of the State and the fulfilment of the previous points of this agreement will be promoted.

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SECOND DECISION: The National State will finance with resources from General Rents the global deficits of the provincial forecast systems not transferred to the date of this convention according to the current regimes; such as those of those systems that have a projected deficit originating in individual form (civil personnel, teachers, police, etc.). The funds will continue to be administered by the respective provinces, if they so wish or constitutional clauses prevent their transfer, who will harmonize within 180 days their integrated retirement and pension systems for their future beneficiaries on the basis of national guidelines on the system of contributions and contributions, as well as the requirements for future benefits.

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Without prejudice to this, the provinces may constitute compensatory funds for certain special situations by assigning them specific resources, by law and with administration by the respective box. The National State will finance the deficits in a staggered and cumulative manner in the following percentages: by the year 2000 5 per cent, 2001 20 per cent of the annual deficit in the forecast system of each province. To this end, the relevant Conventions between the National State and each Provincial Government shall be sanctioned, which shall include a complete audit of the pre-existing situation.

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In the event of the extension of fiscal pacts or the issuance of the new law from the expiration of the present law, the attention of the State to the fiscal deficits of the provincial forecast systems not transferred in the next three years shall be completed.

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THIRD DECIMO: The Province of Tierra del Fuego will continue to be liquidated in accordance with Decree PEN 702/99, in any non-inclusive figure mentioned above.

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DECIMO FOURTH: The funds received by the Autonomous City of Buenos Aires are not included in the present agreement and will be allocated under the same parameters as the provinces.

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DECIMO QUINTO: This Commitment will be applied by the parties immediately.

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DECIMO SEXTO: In cases of provinces that have signed supplementary records to the Fiscal Pact I Agreement between the National Government and the provincial governments concerned and Fiscal Pact II For Employment, Production and Growth, which provide for the payment of fixed amounts, the National State undertakes within 90 days, following the opinion of the Federal Tax Commission, to agree on the solution that allows the relationship between the two jurisdictions to be healed.

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DECIMO SEPTIMO: This commitment must be communicated to the H. Congress of the Nation by the Executive Power for ratification.

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I hereby record that on behalf of the Province of Chubut and as Governor-elect, I express my agreement to sign the Federal Covenant agreed between the National Government and the Provinces at the headquarters of the Federal Investment Council on 6 December 1999.