State companies were left in the red to the tune of US$18 billion during Alberto Fernández’s government (2019-2023), new data shows.
The figure represents the cumulative operating deficit for state firms between 2020 and 2023. It comes from data published by the Finance Secretariat of the Economy Ministry this week. The biggest loss-marker was state-run energy company ENARSA, mostly through subsidies, while national carrier Aerolíneas Argentinas lost nearly US$3 billion over the period.
Looking just at last year, the operating deficit of more than 30 non-financial state companies left a negative balance of 1.6 trillion pesos, which at the average exchange rate for 2023 (295.21 pesos) works out at around US$5.44 billion.
President Javier Milei, a vocal proponent of privatisation, is eager to sell-off many state firms but his attempts thus far have been thwarted by legislation and opposition in Congress.
The 2020-2023 period (President Fernández took office in December 2019) shows that the losses of state companies amounted to a total of US$18.03 billion. This figure was reached by calculating the cumulative operating deficit every year in pesos, which is then converted to US dollars at the average exchange rate of each 12-month period.
The global operating deficit (the difference recorded by each of the companies between income generated and expenses incurred exclusively by its activity) is mostly explained by the Fernández administration’s very deliberate policy of applying subsidies.
Hence at the top of the list there is always Enarsa. The company imports energy at a market value and delivers it to the local market at a subsidised price. The cost of state railway services and water also cost up heavily. State airline Aerolíneas Argentinas also delivered heavy losses, despite offering fares at similar prices to its private competitors.
Despite repeated years in which they failed to break even, many state firms managed to keep their staffing levels more or less stable. On the last day of 2023, the report highlights, “the staff of all non-financial state companies amounts to 92,058, whereas as of December 31, 2022, the staff was 93,095 people.”
Milei government officials have already begun cutbacks at many public companies and further lay-offs are expected.
The cost to public coffers over the three years amounted to roughly one point of Argentina’s GDP. This figure will likely drop given the Milei administration’s moves to slash subsidies for utilities, with energy and gas prices soaring.
Enarsa, in particular, will look healthier in the end-of-year accounts. In 2023, covering subsidies amounted to around 40 percent of the firm’s total operating deficit, some 713 billion pesos (US$2.41 billion).
State train services were also responsible for a large portion of the losses. Last year, the government transferred 335 billion pesos or US$1.13 billion, or aroundUS$3.1 million per day. It made 344 billion pesos back in the sale of tickets.
The Argentine railway system is a main employer in the country, with a staff of nearly 32,000 people. One out of three employees at state companies work on the railways.
The report also reveals that Aerolíneas Argentinas had an operating deficit of 231.26 billion pesos, or US$783 million. Over the four years of the Fernández administration, the state airline accumulated an operating deficit of nearly US$3 billion.
Out of the 33 “non-financial state companies,” some made money back. Nucleoeléctrica Argentina (NASA) has been in the black for the last few years. In 2023, it closed with an operating profit of nearly US$350 million.
– TIMES/NA
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