Manasse, P., (2014), “Privatizations and Debt : Lessons From The Greek Fiasco”, EconoMonitor Blog, 02 January.
In the midst of the European Debt Crisis, it is tempting to think that high-debt countries could alleviate the recessionary impact of the budget consolidation process by selling (poorly managed) assets and stakes in their state owned enterprises (SOEs), and by using the proceeds to buy back their debts. In addition to providing a cushion for ongoing adjustment programs and improving solvency, privatizations are deemed to entail long-term efficiency and welfare gains, by attracting foreign direct investment and managerial expertise, spurring competition and growth.
Indeed, privatizations have been part of the Troika’s conditionality in Greece since the outburst of the crisis. In March 2011 an agreement was signed by Greece and the Troika for a very ambitious privatization plan which envisaged the sale of public utilities, tourism resorts, concessions for the Athens airport and the port of Piraeus, the sale of government shares of the OTE telephone company, the partial privatization of the Greek Agricultural Bank. In exchange, Greece could have tapped the EFSF at more favorable conditions. The original plan was to raise €50bn within 2015, about 17% percent of the (then) outstanding debt.
The plan’s progress has been disappointing: in 2012 only 2 out of 35 privatization tenders were completed (see Table 1), mainly due to delays in the required legal and regulatory changes (“Government Pending Actions”, in the Commission’s jargon). In 2013, 10 tenders were completed
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Σχετικές Αναρτήσεις
- Ioannides, Yannis, (2013), “Privatizations and Long Run Growth: Doing it Right?”, Greek Economists for Reform Blog, 7 April.