IMF advice to Ukraine: Fight corruption at SOEs by privatizing them

Thursday, June 9, 2016 - 16:00 (EEST) Section: Latest news

First Deputy Managing Director of the International Monetary Fund (IMF) David Lipton said in an interview with the Ukrainian weekly Novoe Vremia that state-owned enterprises in Ukraine become a breeding ground for inefficiency and corruption, and advises Ukrainian authorities to continue active work towards privatization.
Lipton argues it is unnecessary to wait for a proper time to carry out privatization, because losses may outweigh the potential benefits.
According to Lipton, the privatization of state-owned enterprises will help to significantly reduce the ineffective use and waste of resources in the sector, as well as minimize corruption risks. It may also contribute to stability and growth, as well as the improvement in living standards.
As UNIAN reported earlier, according to the state budget for 2016, Ukraine plans to raise up to UAH 17.1 billion from privatization this year. At the same time, State Property Fund`s Chief Ihor Bilous stated earlier that the national budget this year could obtain up to UAH 20 billion from the privatization of state-run companies.
In early March, President of Ukraine Petro Poroshenko signed the law on amendments to the privatization process. The law abolished the requirement for an obligatory sale of 5%-10% of shares of state-owned strategic companies on stock exchange during their privatization.
Odesa Portside Chemical Plant (OPP) is the first and major asset on the privatization list that is planned to be sold during the auction in July this year. The Fund also plans to put up for sale state shares in regional power distribution companies.
In mid-May, the Cabinet of Ministers approved the privatization terms of the OPP with a starting offer of UAH 13.175 billion.
It was reported that the European Bank for Reconstruction and Development, as well as the IMF suggested that the Ukrainian government reduce the starting price of the OPP. The State Property Fund argues it is a sound and reasonable price and its revision in the shortest terms is impossible.