Budget Issues:

Privatization Practices in Argentina

AIMD-96-55: Published: Mar 19, 1996. Publicly Released: Mar 19, 1996.

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Pursuant to a congressional request, GAO examined privatization in Argentina, focusing on how Argentina: (1) values and prepares assets for sale; and (2) uses sales proceeds.

GAO noted that: (1) Argentina's privatization process is less centrally controlled than other countries and uses special privatization committees to foster its sales process; (2) the Argentine government generally retains the liabilities and obligations of the entities being privatized in order to enhance their sale price and ensure their sale; (3) the Argentine government believes that the private sector does a better job of investing in and improving enterprises; (4) although the government dissolved some industries to foster more competition, many are still monopolies and require some regulatory framework; (5) when the Argentine government values the assets of an entity, it determines the level of improvement and investment that the purchaser will need to make; and (6) the proceeds from Argentina's privatization are used to finance its social security system and existing debt.

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