Cabinet is trying to fill the nation’s coffers

We have learned this news from the Minister of Economic Development and Trade Petro Poroshenko’s statement at a meeting with President of the Black Sea Trade and Development Bank, as reported by the Ukrainian National News agency: “We are expanding the privatization program. At a Cabinet meeting, I have submitted a bill calling for a significant reduction in the list of the state-owned enterprises (SOEs) that may not be privatized. For example, just 290 out of 1,492 SOEs are to remain on the revised list,” Poroshenko said.

The list of the SOEs not subject to privatization is part of Ukrainian legislation. It includes, in particular, many transportation facilities that may be of interest for Ukrainian and foreign investors. These include ports, port infrastructures, railways and public roads.

Yaroslav ZHALILO, Deputy Director of the National Institute for Strategic Studies, Cand. of Sc. in Economics, Honored Economist of Ukraine:

“My assessment will depend on which SOEs exactly will be put up for privatization. There are not that many of them left, especially among those that have been excluded from privatization. Should some of them belong to the defense industries, one must be careful. Regarding the national railway, we have heard recently that it would not be put up for privatization. Privatization of some service subsidiaries of the railway looks possible, though...

“Overall, I believe that present conditions in Ukraine allow us to say that privatization of an enterprise should be seen as a way of increasing its efficiency, promoting competition and thus improving the quality of services provided. This calls for strengthening the role of economic policy institutions such as antitrust and consumer protection agencies, to ensure that the new owners would not abuse the commanding positions they would receive, especially in sensitive industries such as ports, railways, etc.

“It is clear that the government is struggling to fill its coffers and needs to find some resources that will improve the situation. In fact, this is the reason behind the current surge of privatization activity, even though it seems to me that under the current depressed economic conditions, the government would gain little from privatization as asset values are low, while prospective buyers are few. Therefore, the privatization proceeds would be not that large. But then again, one has to judge each case on its own merits, looking at the investor’s characteristics, its proposals and conditions, etc.”