Argentina's government says it has no plans to sell the stakes in local companies that it inherited when it nationalized private-sector pension funds in late 2008, as it would damage the interests of both the state and the companies.

With the opposition calling for higher payouts for pensioners, and a debate under way about how the government should finance government pensions, Economy Minister Amado Boudou ruled out the sale of shares in the 43 companies in which it now owns stakes, ranging from tiny fractions to a 31% stake in Banco Macro (BMA).

"We haven't done this [sell any shares], nor are we going to do this," Boudou said at a press conference to discuss pension payments. This provides peace of mind for directors and workers, and safeguards the Argentine economy, he said.

In late 2008, the state social security plan ANSES took over some $23.5 billion in assets, including shares, from about 10 private-sector pension funds. Small stakes owned by each of the funds in some of the largest Argentine companies were merged under single ownership, giving the government significant clout.

According to ANSES, its total investment in shares was worth 15.9 billion Argentine pesos ($4 billion) at the end of April, equivalent to about 11% of its total assets. It received ARS311 million in dividends in 2009, and expects to receive ARS577 million in 2010, according to a June 1 presentation by ANSES to Congress.

ANSES, through its Fondo de Garantia de Sustentabilidad, owns about 19.4% of Pampa Energia (PAMP.BA, PAM), about 25% of Telecom Argentina (TECO2.BA, TEO), 20% of Grupo Galicia (GGAL), and about 7% of Petrobras Energia (PZE).

Boudou said that if the government took the "irresponsible action" of selling the shares, losses would be about 50% of the value of companies such as Telecom, Siderar (ERAR.BA) and Banco Macro. It would also risk putting ownership of the companies into the hands of international speculators, Boudou said. "This would be a loss of private and social capital which this government is going to defend," Boudou said. "When we see what effect the instantaneous sale of shares and investment funds could have, we also see this would have a stong impact on the consumption and credit of Argentine families."

The impact of the pension fund takeover on the local stock market was devastating. Not only did the government remove the main players practically overnight, but it also consumed most of the free float, leaving just a small fraction of shares available for investors to trade. Market participants say that ANSES is far less active than the pension funds were. Share trading, which had already dwindled since an economic collapse in 2001-2002, shrunk even further to levels of around $10 million a day.

Furthermore, the government has been accused of using those stakes to exert influence over some of the companies. ANSES's role should be limited by a rule that prevents it from having more than 5% of the voting shares, but at least one company has questioned whether that works in practice.

"ANSES has already attempted to exercise voting powers commensurate with its total share ownership at various shareholder meetings of many companies, including Telecom Argentina," the Argentine telephone company said in a recent filing with the U.S. Securities and Exchange Commission. "In the majority of these cases, these companies have opposed ANSES' actions and the parties have reached an agreement."

One of Telecom's main owners, Telecom Italia (TIT.MI, TI), has been involved in a long antitrust battle with the Argentine state. The government wants Telecom Italia to sell its stake because the Italian company is partly owned by Spain's Telefonica (TEF), which owns the other main Argentine telephone company, Telefonica Argentina, creating what authorities consider a monopoly in the local market.

In the SEC filing, Telecom Argentina said that the "nationalization of Argentina's pension and retirement system constitutes a significant change in the government's approach to exercising influence over Argentina's main publicly traded companies."

"On average, approximately 20% of the share ownership and a significant portion of the public float of these companies were owned by the [private pension funds] and are now held by ANSES," Telecom said. There's an "absence of clearly established policies," and the criteria for electing ANSES representatives to boards of directors "is still unknown, as are its mandates," it added.

-By Matthew Cowley, Dow Jones Newswires; +54 11 4103 6740; matthew.cowley@dowjones.com