Argentine government doubled public enterprises’ deficit, the highest in 30 years

The measures adopted to contain the fiscal deficit did not materialize any result on the structure of the State.

The latest report of the Ministry of Economy regarding the cash basis fiscal balance estimates that the operating deficit of the public enterprises reached 0.87% of the GDP in the accumulated year to August.

The deficit result only includes the losses associated with the operating costs of state-owned companies concerning their current revenues but does not consider other items, such as transfers or capital contributions from the central government.

The State-owned enterprises’ deficit is the largest in the last 29 years, according to the monthly series of the Ministry of Economy starting in January 1993.

Considering annual statistical sources, the imbalance of the “entrepreneurial State” is the largest since 1991.

Under the short-lived administration of Silvina Batakis, the government designed a single Treasury account system (CUT) to monitor State finances more efficiently while the entry of personnel to the National Administration was frozen.

The fiscal deficit in July remained relatively stable, and the red of the State-owned companies continued to grow.

With the arrival of Sergio Massa to the Ministry of Economy, the freezing of public administration agents was extended to state-owned companies and decentralized agencies. At the same time, the parameters for updating public tariffs were set.

However, the measures failed again because they were insufficient, and the fiscal deficit increased in August.

The primary deficit rose to 3.4% of GDP in August, while the financial deficit reached 5.2% in the same period.

The loss of state-owned companies doubled so far in Alberto Fernández’s administration, as it went from 0.39% of GDP in December 2019 to 0.87% at the end of August 2022.

The Kirchnerist government increased the imbalance of the companies that the previous administration refused to privatize and even produced new nationalization.

Fernández promoted the nationalization of the Paraná-Paraguay Waterway through a decree after 25 years of efficient private management, leaving a millionaire cost in the hands of the General Administration of Ports and the society.

Not satisfied with this, Kirchnerism revoked all public-private participation contracts for the generation of public works (PPP) and determined the nationalization of all toll roads nationwide.

By 2022 alone, a loss of up to ARS 100 billion (US$670 million) is projected for State Railway Operator (OFSE), the public company with the largest deficit on record.

The irresponsible expansion of economically deficient and loss-making branches and the addition of personnel without productivity criteria were some factors for the soaring deficit.

With information from Derecha Diario