© 2000 International Monetary Fund
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Library of Congress Cataloging-in-Publication Data
Fiscal and macroeconomic impact of privatization/Jeffrey Davis… [et al.].
p. cm—(Occasional paper, ISSN 0251-6365; no. 194)
Includes bibliographical references.
ISBN 1-55775-888-3
1. Privatization—Case studies. 2. Government business enterprises—Case studies. 3. Finance, Public—Case studies. I. Davis, Jeffrey M., 1946 II. Occasional paper (International Monetary Fund); 194.
HD3845.6 .F57 2000
338.9’75—dc21 00-0031909
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recycled paper
Contents
Preface
I Overview
Privatization Proceeds
Uses of Privatization Proceeds
Fiscal Impact of Privatization
Macroeconomic Impact of Privatization
Issues for IMF-Supported Programs
II Privatization Proceeds
Scale of Privatization Proceeds in the Case Study Countries
Factors Affecting Budgetary Proceeds
Fiscal Reporting of Privatization Proceeds
III Use of Privatization Proceeds
Privatization and Government Net Worth
Short-run Macroeconomic Effects of Privatization
Use of Privatization Proceeds: Choices and Experience
IV Fiscal Impact of Privatization
Contemporaneous Use of Privatization Proceeds
Effects of Privatization on the Fiscal Accounts Over Time
V Macroeconomic Impact of Privatization
Effects on Growth and Investment
Impact on Labor Markets
VI Issues for IMF-Supported Programs
Privatization in IMF-Supported Programs
Privatization and Program Design
Appendices
I Factors Affecting the Sale Price of State Assets
II Privatization and Fiscal and Macroeconomic Developments
References
Boxes
Section
III 1. Sterilization of Privatization Revenues in Hungary
IV 2. The Impact of Economic Transition on Tax Administration
3. Fiscal Issues in the Privatization of Profitable Public Enterprises
V 4. Mitigating the Social Impact of Privatization
Appendix
I 5. Governance Issues in Privatization
6. Loans-for-Shares Privatization in Russia
Tables
Section
II 1. Gross and Budgetary Privatization Proceeds in Case Study Countries
2. Privatization Proceeds Accruing to the Budget in Case Study Countries
3. Budgetary Treatment and Classification of Privatization Proceeds
III 4. Use of Privatization Proceeds in Case Study Countries
5. Earmarking of Privatization Receipts in Selected Countries
IV 6. Impact of Privatization on Domestic Financing
7. Reduction in Debt Stock and Privatization
V 8. Summary of Three Studies of Firm-Level Efficiency Gains from Privatization
VI 9. Design of Adjusters Related to Privatization Receipts in Programs with Case Study Countries
Appendix
I 10. Factors Affecting the Sale Price: Country Illustrations
II 11. Contemporaneous Impact of Budgetary Privatization Proceeds on Domestic Financing
12. Structural Relationship Between Total Privatization Proceeds and Selected Variables
Figures
Section
IV 1. Gross Budgetary Transfers and Subsidies to Public Enterprises for Selected Countries
2. Operations of the Public Enterprise Sector Before and After Privatization for Selected Countries
VI 3. Monitoring Privatization in IMF Arrangements Approved in 1994–98
The following symbols have been used throughout this paper:
… to indicate that data are not available; n.a. to indicate not applicable;
— to indicate that the figure is zero or less than half the final digit shown, or that the item does not exist;
– between years or months (i.e., 1997–98 or January–June) to indicate the years or months covered, including the beginning and ending years or months;
/ between years (i.e., 1997/98) to indicate a crop or fiscal (financial) year.
“Billion” means a thousand million; “trillion” means a thousand billion.
Minor discrepancies between constituent figures and totals are due to rounding.
The term “country,” as used in this paper, does not in all cases refer to a territorial entity that is a state as understood by international law and practice; the term also covers some territorial entities that are not states, but for which statistical data are maintained and provided internationally on a separate and independent basis.
Preface
The paper reflects the contributions of several members of staff in the IMF’s Fiscal Affairs Department. In particular, the authors are grateful to Rosa Alonso, Benedict Bingham, Isaias Coelho, Louis Kuijs, Jun Ma, Eric Mottu, Martin Petri, Arnim Schwidrowski, István Székely, George Tsibouris, and Timo Välilä for their research into the privatization experience of the case study countries. They would also like to thank John Nellis, as well as others at the World Bank, for their advice and support. Helpful and insightful comments on the paper were provided by Vito Tanzi, and colleagues in the Fiscal Affairs Department and in other departments in the IMF.
The authors appreciate as well the efficient research assistance provided by William Riordan and the document preparation assistance provided by Heather Huckstep. Gail Berre of the External Relations Department edited the paper and coordinated production of the publication.
The views expressed in the paper, as well as any errors, are the sole responsibility of the authors and do not necessarily represent the opinions of the Executive Board of the IMF or other members of the IMF staff.