Buenos Aires, February 23, 2011 - The World Bank Board of Directors approved yesterday a $30 million Project for the Province of La Rioja with the dual objective of strengthening public sector management and improving public administration. The project will help ensure effective and sustainable delivery of essential public services for human and productive development, as well as boost tax collection and public expenditure efficiency.
When the project ends in 2015, La Rioja should see, among other outputs, 10,000 new urban land parcels included in the Provincial Cadastre, an 18 percent growth in tax collection, an increase in competitive public bidding, and an increase in the volume of production through a 50 percent reduction (from a current average of 30 days to 15 days) in the time elapsed between water irrigation shifts, according to the document approved by the World Bank.
“The activities described in this project will help to increase efficiency in the public sector management and also optimize the management of irrigation water supply systems to benefit local productive activities,” said Eduardo Rojo, Institutional Representative of La Rioja.
La Rioja is now joining the ranks of other public entities, both in the country and in the region, that redirect provincial public expenditures according to expected results. In this way, project disbursements will be linked to specific goals agreed with local authorities.
An arid province in the northwest of Argentina, La Rioja has the potential to reduce rural poverty by increasing exports, employment and overall growth through agriculture and related industries. However, its limited local tax revenue and low public sector efficiency have held back its economic and social development.
“The project will promote improvement in water management of rural areas, a key resource in this arid province, where agricultural-related activities represent the main source of job opportunities and generate more than 65 percent of total provincial exports. It also seeks to increase tax collection and to improve provincial public expenditures,” said Penelope J. Brook, World Bank Country Director for Argentina, Paraguay and Uruguay.
The Project “Strengthening of Public Sector in La Rioja” has two specific components:
1. Public Sector Reform in tax administration, public expenditure and rural water management:
· Tax administration — to increase tax collection by 18 percent in 5 years, through updating the provincial cadastre to include 10,000 parcels to the system, and to modernize the tax collection system.
· Public expenditure — to introduce a new public procurement system and develop a strategic plan with performance indicators and professionalization of staff in eight Government Agencies.
· Rural water management — to improve irrigation management and access to drinking water for consumption and production. This will include:
o The design of an environmentally sustainable water strategy.
o Improvements in the operational capacity of ten percent of the Water User Associations, responsible for the management of irrigation districts and the maintenance of the water systems, and the training of 4,000 farmers in new techniques related to sustainable water management.
2. Technical Assistance: to support the modernization of the tax administration function, the improvement of the quality and efficiency of expenditure programs, the development of a strategy to improve management of and access to water resources by dispersed rural populations, and project coordination and supervision.
La Rioja suffers severe droughts and desertification. Managing hydrological resources for irrigation is fundamental for the agricultural-related activities and agro-industrial sector, which represents 12 percent of gross domestic product, more than 65 percent of total provincial exports, and a considerable share of provincial employment.
La Rioja is a province with 335,350 inhabitants and has registered an average real annual growth rate of 7.0 percent during the last 6 years. It faces, however, poverty levels in urban areas 14.2 percent above the national average and per capita income less than half of the national average.
The Project “Strengthening of Public Sector in La Rioja” will be financed by a US$30 million loan with a 25-year maturity period and a 5-year grace period.