The Argentine privatization process was less centralized and more flexible than in the other countries we studied. Valuation and Preparation for Sale

In Argentina, the government was required to estimate the worth of an entity prior to sale as well as determine what level of improvements and investment should be required from the purchaser once it acquired the entity. The new owners were then required to create private sector corporations to control the assets of the privatized entities. Type of Sale and Sale Process

The Argentine government privatized public enterprises primarily through divestiture and the awarding of concessions. Competition and Regulation

Although the Argentine government generally tried to foster competition through the privatization process, it has experienced some problems promoting competition. Use of Proceeds

We were told by a government official in Argentina that the government is required to use the proceeds from privatization to finance the social security system or to buy down existing debt.
Why GAO Did This Study

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.

What GAO Found

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.