Financing Privatization under Limited Capital Conditions

摘要

Due to inadequate financial markets and institutions and restrictive government regulations, privatization programs involving the sale of state-owned enterprises (SOEs) are often constrained by insufficient availability of private investment capital. Selected near-term solutions are examined. The paper (1) sketches typical target SOEs and aspects of the capital shortage problem; (2) looks at possibilities for and constraints on foreign investment; (3) examines specific methods to effect privatization under limited capital conditions, including debt-equity swaps, leveraged buyouts, employee stock ownership plans, management contracts with profit-sharing clauses, leasing with option to buy, and, in serious cases, the choice of simply giving the SOE away; and (4) considers the role foreign donors and lending institutions can play in promoting policy dialogue and financing privatization support mechanisms (e.g., discount facilities, training programs, and the creation of special funds for legal fees or labor compensation).