What is a flow of funds accounting framework and why do we need them?  Why do we need one for Argentina?  Why to make it public and available to all is so important?

A flow of funds accounting framework is a method to track the health of the financial system of a given country.  This method uses the flows of money of different actors of an economy to indirectly asses how strong that financial system is, or not.  Abrupt changes in the system mean a crisis.

Why is this FoF so important?  This FoF includes all financial statements of three levels of government of Argentina.  In the past, there has been a lot of argument about how government debt played in developing the 2001-2002 crisis, therefore it is extremely useful to be able to forecast Net Foreign Assets while it is linked to government deficits/surpluses.

Having a model for Argentina becomes exceptionally important due to the fact that the country went through many financial struggles in the last hundred years.  The last thirty years alone have shown the following.

1. A massive conversion (bail-out) of private to public debt in 1982, increasing the burden of debt carried by tax payers;
2. A period of hyperinflation in 1989-1991, dissolving the purchasing power of the general public; and
3. A general recession generated by an over appreciation of the peso and by enormous levels of public debt which then produced massive losses of foreign reserves, and therefore the lost of savings of citizens.

Narrowing our vision to those events only, it seems that Argentina cannot find an arrangement of institutions, policies and strategies that allow the country to grow while giving sustainable opportunities to generate wealth to its inhabitants.

Making this model available will help in many different ways, directly and indirectly to understand the past and present of the flow of funds of Argentina and therefore to predict the potential of occurrence of future crisis.  The ability to anticipate crisis will give an opportunity to avoid them.  Many stakeholders will take advantage of such information, and the fact that it is of public access, will make it even easier for the general public.