Argentina’s state-owned firms

So far, not so good

Can YPF avoid the grim fate of other nationalised companies?

See article

Readers' comments


Brigido Cadenasso

Free market orthodoxy fails time upon time. When Mr. K rose to power The Economist predicted pessimistically on the growth of economy of Argentina - the opposite happened, and a new prediction of downfall was done. That prediction has since long ago expired.

The errors are too many. Liberal theory has some wisdom, no dubt, but astrology is not far in accuracy of predictions.

At the end The Economist authors will have to understand that God is Argentine - if not, how does it come that liberal does not apply to the country?

Recoveryless Recovery

Most Argentines do not have the FOGGIEST idea of how Cristina Kirchner is BURNING thru her nation's financial resources in order to pay for all her social programs & government spending.

She's already depleted the central-bank reserves, the pension funds and has now set her eyes on YPF which I assume, based on her evident efficiency in such matters, shall be RUN INTO THE GROUND in about 3 years time ..tops.

Unasur in reply to Recoveryless Recovery

"She's already depleted the central-bank reserves, the pension funds"

"the government’s management of ANSES, the national pension scheme, seems a bright spot: its assets have risen from $24 billion in 2008 to $46 billion now"


It is very clear that Gvt go for "profits". I strongly believe that they don´t want to confiscate every company, just only high-profitable ones...
I set an example of this situation: they don´t take over energy companies or another service public companies like CAMMESA because of its high losses. It is false that they are worried about people. Gvt don´t send any money to Provinces and these ones have to face a lot of problems in order to pay salaries that are increasing month by month due to high inflation, that is pushed up by Union Labours and...Gvt.
Moreover, people must face a high fiscal pressure on salaries and tolerate freaky control Gvt officers. Not only they don´t cut the red tape but also they broaden controls over the whole economy (you can´t buy dollars if you are not authorized by AFIP (National Tax Office).
It is a real shame that this country only goes by what CFK and her fellows says. Regards.

JulioT in reply to HRNNBRTT

Can you name developed countries where you can freely buy foreign currency without being controlled by or having to report to the state? Limits?
I suggest showing hard data, rather than have imagination fly...

HRNNBRTT in reply to JulioT

Firstly, in the developed countries, you have clear rules for playing in the markets and running business, you don´t face controls over your business day by day.
In Argentina, due to lack of confidence in our Gvt, if you want to get a house or a premium car or your company want to buy a machine you must exchange pesos for dollars because of every assets are express in dollars so you have to pay up these in dollars not in pesos.
Another collateral effect is that in Argentina you always approve an investement project in dollars, so if you want to invest here, at the beginning you have a high loss that reprsents the difference between official market and blue market so Arg must expect to suffer a drop from this gap.
Argentina has made a big progress in the last 10 years but We keep on discussing how much cost a pack of butter or a sack of sugar... I suposse that if Arg grows at amazing rates, we have to set another goals not only how much cost fares of subways, busses, a kilo of meat, etc but also create better conditions for foreign and local invest. Regards

JulioT in reply to HRNNBRTT

Forgive me for repetaing myself, but, can you name developed countries where you can freely buy foreign currency without being controlled by or having to report to the state?

Maybe you are young, but the dollar-obsessive behaviour in Argentina dates back to -at least- 50 years. You can see re-runs of Tato Bores TV programmes of the 60's in which he talked about people sleeping at night in the streets (no one of them homeless) to be frontrunners for buying dollars the next morning.
There is not such behaviour in Brazil, Chile or Uruguay.

The so-called 'blue market' is an illegal one. If we are going to be a good place for investment, condoning illegal practices would not be the best way.

It's not to blame the government -that may act stupidly- for particulars doing unlawful operations. There are now a bunch of thugs making a lot of money by preying on desperate people who want to buy some dollars. Some of the latter do really need them (i.e. an importer who has to pay for goods), other simply are running after the rumours some information terrorists are spreading.

The government should stop giving way to those actions by reverting stupid measures like blocking almost all operations on foreign currencies.


This newspaper is owned by the Rothschild family, which is a banker dynasty that has influenced global commerce for more than 200 years.
By manipulating public opinion through their unlimited resources they have set of the specific economic policy prescriptions that benefit their own interest. Anything that goes against those prescriptions will be shown as a mistake.
Of course that Argentina and its non-conservative government are not playing ball with them.


Today Government round the World expropiate when they can't do anything else, and a bankrupcy put risk to a country. For this thing, G.W. Bush take control of AIG and GM, for this thing Rajoy take control of Bankia, and for this thing CFK take control of YPF.

YPF was going into bankruptcy.

AtlantisKing in reply to Unasur

Oh, please... AIG was never government-controlled and GM is back in private hands Can anyone imagine a scenario where the Argentinian government would return those companies to private hands...

Unasur in reply to AtlantisKing

I don't know if GM and AIG was manage by American Government, but i know the Government put the money.

And if you put money and don't take control of the company you're swindling to the people. That's corruption.


Curious article. First, it seems to suggest that when private investors win money, it’s OK. On the other hand, if the state (i.e. ANSES) expands its funds investing some of them, it is bad. State HAS to be fool, privates, smart.
I have to recall that the former private pension funds were investing retirees’ assets as they saw fit, in many cases translating the earnings to their parent companies (international banks, in general), while passing losses to the workers’ accounts. There are judicial processes initiated upon these unlawful practices.
Regarding ‘mandatory workers contribution’, when funds were privatised, the administrators took 30%! of the money invested (those mandatory contributions) as commission. Do we all have to be so stupid?

Second, Aerolineas Argentinas was utterly destroyed, starting by Iberia, which also sank Viasa in Venezuela and Ladeco in Chile, and then by the Marsans group, to the extreme of losing the property of all but one aircraft. I accept that the current leadership in AA can be criticised, but, for people outside Buenos Aires, the state company may be the only way to get air travel without having to pass through the capital city. Of course, for citizens in BA and their media, this would be moot. It would not show in the financial results.
I encourage TE to renew the statistics of on-time flights; it may come with a surprise.

I don’t get what Kirchner took of the railways. Seems to be a mistake by the author. Railway services were concessioned by Menem and continue to be that way, except for some few and minor provincial lines, with no weight whatsoever. In general, after privatisation, passenger services were kept only in the Great Buenos Aires are, under private concessions, with the known bad and tragic results (here the state is responsible of insufficient control).

A French company got in the 90’s the concession for water and sewer in Buenos Aires. When the peso was devalued, they stopped investment (which had been very little anyway) claiming increased costs and fixed rates. We readers of The Economist know well what was the result of a discussion here about potable water availability as a basic right, not to be mediated by classic economic results; if one adds public health costs to the equation, any expenditure for clean and abundant water is almost nil.

In summary, the article focuses on public services, which are a very particular side of business operations. In most cases there cannot be more than one supplier per area, so regulations have to be present.
Regarding YPF, most – if not all – Argentines hope it will be managed properly; it was already done once, under Jose Estenssoro. It can be done again.

Sorry for the extension of this.

Tony Bianco in reply to JulioT

I think you made a number of good points. Yet, you should also know that the government's policies make it difficult for other carriers, such as Pluna or Tam, to have direct flights to cities in the rest of Argentina, which forces you to use AA if you want go go somewhere. Nothing suggest that the YPF we will see in the future is anything but what we saw under Estenssoro. States can own companies, but cannot run them. Singapore owns many, all of them run like a clockwork (use Singapore Airlines and you'll see what an airline is supposed to be, or exchange planes at Changi).


Before being privatized in the ´90´s state-run YPF had a staff of 45,000. A year after being privatized the payroll had shrunk to 4,500, and production had actually risen. This alone should be an indication of the dismal administration of all public companies in Argentina, bar none. It is just a political booty, to provide goods and services often at a fraction of market values, employ cronies and prospective voters, and in this case to grab a cash-rich company with the apparent intention of paying nothing at all. In plain English this is confiscation, not expropiation, utter theft, a gross embarrassment to me as an Argentine, and as a prelude of dark days to come to this country. Mischief, thou art afoot, take what course thou willt...

luisds in reply to luisds

And I forgot to mention an even more grotesque and farcical case. State-run LAFSA airline. Created several years ago, before taking over Aerolineas Argentinas, just to show the private sector on how to run an airline, to this day it has everything it needs, obviosly paid for by the taxpayers: lavish buildings, heaps of managers in plush offices, a bulky staff, air hostesses, pilots, with one minor embarrasing detail. It lacks any planes, and has yet to make an inaugural flight. I rest my case (out ex exhaustion and despair, mainly).


"On the surface, the government’s management of ANSES, the national pension scheme, seems a bright spot: its assets have risen from $24 billion in 2008 to $46 billion now. However, most of this increase stems from a rising local stockmarket."

Funny, TE says if you invested 1 dollar four years before in Argentinian stockmarket, you've got 2 dollars now, but in others articles says that Argentina is not a good place to invest.

I don't understand this newspaper.

psicutrinius in reply to Unasur

"However, most of this increase stems from a rising local stockmarket and from the $7.5 billion a year it receives in tax revenue and mandatory workers’ contributions. The system would be even better off had Ms Fernández not raided it in 2009-11 for $6.8 billion".

The point here is that the Government considers ANSES, as well as other companies, a candy jar they can raid as and when they so desire.

The other point you raise is answered the same way. The better you do, the sooner you are forced to bring prices down, so that the value of your assets tumbles and you cannot reinvest any profits and then you are guilty of non-investing and are raided so that your assets go into the same candy jar.

You should learn to read. Otherwise, you will never understand, not this newspaper, but anything.

Unasur in reply to psicutrinius

7.5 billion minus 6.8 billion is 0.7 billion. Yes, stockmarket explain most of the increase, (where TE says you shouldn't invest).

I red this article but I think what it says is not the truth.

Argentinian ANSES now works as modern pension funds, investing in companies, putting money in importants proyects, buying Government bonds, having banks deposits.

Unasur in reply to AtlantisKing

Argentina used to have low FDI but high domestic invest (more than 25% every year)

World investors who read newspaper like TE, Yes, they don't invest in Argentina. But global company which they are now in Argentina, yes, they invest.

That's the key, Companies want to earn money, in Argentina they recover money fast, but in Europe....

Tony Bianco

Chavez got his hands into PDVSA and rapidly transformed a well-run company into a basket case. There is no reason to believe Argentina will do otherwise with YPF. It was dramatically trasformed from probably the only oil company in the world who lost money into an efficient operation under the late Estenssoro, to be sold to a second rate company like Repsol when the government (and perhaps some of its members) needed money. Now, facing a big energy crisis, Argentina wants to undo the recent past. The nationalization is another triumph of hope over experience. But Argentineans seem totally impervious to any experience, as 60 plus years of horrendous governments seem to indicate. It is enough for someone to agitate a nationalist cause for them to lose any sign of discerniment. Thankfully, "God is Argentinean" and hence the country always finds a way to bounce back, though typically to a lower level in the ladder. Nations have the govenments they deserve, after all...

perguntador in reply to benwardsbr

I'd leave God out of this. Too much trouble for the Old Guy. We all know the best way to solve any dispute between Brazilians and Argentines is a football match.

(and yes, everybody knows Pelé still is the best player ever, despite Maradona's challenge and young Messi's best efforts).

This reminds me so much of the film "A Knight's Tale" -

French Squire 1: An Englishman will not win this French tournament. English legs are unsteady on French soil.

French Squire 2: And because French wine is too much for English bellies.

French Squire 1: And most importantly, because the Pope himself is French!

Roland: Well, the Pope may be French, but Jesus is English!



Products and events



