Privatization .. and the specificity of the Iraqi economy 2-3
23/6/2018 12:00 am
Mohammed Turki Al-Qaisi
In the first part, we referred to the policies required for the privatization of state projects and that in a closer look at the importance of privatization in the Iraqi economy and its role in the process of long-term advancement, it is not a policy that is rejected but needs to study and develop appropriate plans to contain the collapse of the Iraqi economy.
The objectives of privatization in all developing countries, including Iraq, can be summed up by raising the efficiency of the performance of institutions through redistribution of roles between the public and private sectors and reducing the role of the state in economic life.
And financial objectives are to reduce the burden borne by the general budget of support for the economic establishments losing and the sale or lease of these projects will lead to the completion of part of the budget deficit.
As well as the establishment and development of efficient domestic financial markets to encourage domestic and foreign investment, as well as the alleviation of external debt burdens, the promotion of economic efficiency through competition and the emergence of economic growth.
The reasons for the privatization of Iraq include domestic and external justifications and pretexts and the latter is the external pressures exerted by the United States of America because one of its motives to enter Iraq is the privatization of the Iraqi economy, in addition to the pressure exerted by the international economic institutions on Iraq, especially after granting Iraq a loan starting from 82 million These institutions, as well as banks and commercial banks, often link their assistance to the extent to which the state implements privatization programs.
The internal rationales revolve around the economic dimensions of privatization. The existing public companies have not made a profitable profit as a source of income for the state, but have become a tool to drain the state budget.
The conditions required of Iraq to implement them are the conditions of the International Monetary Fund, which in turn is working to achieve efficient management of the overall demand and increase the supply is:
I. Adoption of measures to eliminate the balance of payments deficit:
• Reducing the value of national labor.
• Cancellation of foreign exchange controls.
• Pursuing a free market for foreign exchange.
• Cancellation of competitive trade agreements.
• Freeing import from private sector restrictions.
Adoption of anti-inflation measures, including:
• Pressure on public spending, raising taxes, raising prices, canceling advertisements and supporting the state.
• Increase in credit and debit rates.
• Set high limits for bank credit allowed to the government.
• Increasing energy prices.
III. Adoption of measures to encourage private foreign investment, including:
• Giving tax advantages to foreign and domestic private capital activity.
• Ensure free transfer of profits for foreign projects abroad.
• Ensure that private enterprises are not expropriated.
• Narrowing the role of the public sector.
• Amend the laws of companies and develop local capital markets.
What privatization and how to reduce the negative?
Privatization means the transfer of ownership from the public sector to the private sector, a process consisting of interrelated steps that must be applied in a chronological order that begins with:
1. Classification of institutions according to their financial performance and structure of the market (monopolistic or competitive) and arrange their categories: excellent, medium, weak.
2. Restructuring of the institutions expected to be privatized and the surrounding environment: legislation, administration, employment, investments, sources of finance and others.
3. Evaluation of the institutions supposed to be privatized, guided by financial analysis.
4. Transfer of ownership in different ways such as auctions, auctions and sales through the stock market.
5. Transfer of ownership can be wholly or partly
Through Arab experiences in the field of privatization, some conditions have been formulated for caution:
1. The privatization of privatized projects shall be the responsibility of the private sector and without any governmental guarantees.
2. These projects shall be implemented, operated and managed in accordance with the technical specifications set by the Government.
3. The Government shall determine the maximum tariff to be paid by the consumer.
4. The company should be chosen through an open tender called the largest number of national companies, then Arabic, and finally foreign.
5. The company being selected shall be a public joint stock company, offering at least 40% of its shares for public subscription.
6. Encourage Arab and foreign participation in these projects to benefit from funding, expertise, technical and administrative ... etc.
7. The companies that establish for this purpose shall treat the tax companies as national companies, even if their shares are contributed by Arab and foreign individuals.
8. The Company shall grant the incentives provided for in the local laws.
9. Establish more than one company to provide a service to create competition and to allow stakeholders to compare performance and efficiency.
10. The Government and its banks should not grant loans to these projects, or even without interest or grace periods.