Currently, a draft legislative act is pending in Congress that seeks to reform the General Participation System, SGP. Its process will soon end there and it will surely be a constitutional norm. with the support of all parties. Although the intention of this reform is to considerably increase the resources of the regions and strengthen decentralization through these transfers, it also poses significant challenges that have not been corrected to date in the text to be discussed in the last debate.
If they are not corrected, the heart of the project, the desire for true decentralization, will be nothing more than an unfulfilled promise. Congress has the responsibility of ensuring that the GSP reform is fiscally responsible, does not compromise investment in the country and achieves its true objective: decentralization.
This project, which will have its eighth and final debate in the coming days in the House of Representatives, had improvements during its passage through the Senate, with colleagues from different groups. we ensure that the project is coherent with the macroeconomic goals of the country so that it is compatible with the Medium-Term Fiscal Framework, thus ensuring fiscal sustainability. This is not incompatible with the primary objective of the project: to correct the GSP resource deficiency and close the deep territorial gaps.
By introducing the compatibility of the text of the reform with the Medium Term Fiscal Framework, the project corrects, but not completely, one of the most profound problems that it had in its initial version: the project filed is unpayable and, in the words of the DNP , put “the viability of the State as a whole is at risk.” In addition to this, conditioning the entry into force of this reform to the promulgation of a law of organization and operation of the General Participation System and distribution of powers within the State, is a positive change in the interest of having a law that fulfills the unfulfilled promise of decentralization.
However, even with these corrections and successes, the reform still has several points to improve. These are not minor details and remain crucial to ensuring responsible reform and real decentralization. During the course of the project, the deadline was changed to present the law on the transfer of powers from 6 to 12 months. This was a responsible decision, since half a year to build, agree and present a skills transfer project is an unrealistic deadline.
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Congress of the Republic.
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Pitifully, This period was reduced again from 12 to 6 months in the presentation for the last debate, a situation that does not guarantee a serious and responsible competency law. Like this adjustment, several of the positive changes achieved by the Senate were reversed by the House of Representatives.
Likewise, as I have said repeatedly as president of Commission IV of the Senate, the increase of the SGP to 39.5% of the Nation’s current income produces alarming fiscal pressure. This is not a new alarm, since it has been prudently commented on by the Autonomous Committee of the Fiscal Rule, ANIF, Fedesarrollo and the Ministry of Finance and DNP themselves.
Having reduced the GSP increase from 42.5% to 39% is not enough and is not compatible with the recommendations of the Decentralization Mission. An increase of 37% of the GSP, as recommended by the Mission, can provide resources to the regions and territorial entities, taking into account the Medium Term Fiscal Framework and the real capabilities of the State in the face of its Macroeconomic reality.
Another detail to correct is the contradiction between transfer of resources and powers. In the project, in my opinion doing the right thing, it is established in article 1 that “the transfer of fiscal resources, spending responsibilities and additional powers between the Nation and the beneficiary entities, including those assigned to close sectoral economic gaps and territorial, which results under the modification of the GSP and the regime of powers, will be done gradually, simultaneously and equivalently, in such a way that it does not compromise the constitutional framework of the fiscal sustainability of the State and is compatible with the Medium-Term Fiscal Framework and the Fiscal Rule.”
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This ends up contradicting what is stipulated in article 2, which requires resources to be increased each year even without ensuring that the territorial entities have the capacity to assume the corresponding powers. You cannot erase with your elbow what you do with your hand.
It is then necessary to take measures to correct these errors in the shortest possible time so that the Law that reforms the GSP is a serious and responsible law with the country’s finances. This increase in resources must be accompanied by institutional strengthening of territorial entities to increase administrative capacities and accompany the increase in resources with increasingly solid institutions that allow the economic development of the regions.
This strengthening is key to the 1-to-1 transfer of powers that the draft legislative act intends: This is not done overnight and strong support from the State is necessary. to ensure that this transfer of powers is done in the most efficient way and thus ensure that there is no duplication of functions “assigned”. This must also be accompanied by the participation of civil society that oversees the implementation of the reform and the adjustments that are needed along the way.
The plenary session of the House of Representatives has time to correct these errors and bring to the regions what they have been asking for for years: true decentralization. The reform of the GSP cannot be a new unfulfilled promise.
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ANGELICA LOZANO
Senator of the Republic
