Details of plan for privatization of state-owned enterprises announced

April 26, 2020 - 14:46

TEHRAN - The executive regulations of the budget plan of the current Iranian calendar year (began on March 19) regarding the privatization of state-owned enterprises was referred to the Ministry of Finance and Economic Affairs for implementation, Tasnim news agency reported on Sunday.

As reported, the decision in this regard was made during a cabinet meeting on April 5, in which the Finance and Economic Affairs Ministry was authorized to offer the shares of some government-owned companies and enterprises, however the capability and competency of the candidates should be assessed beforehand.

The mentioned ministry is obliged to hand over all the revenues gained from the offerings to the government in order to be used as part of the current year’s budget incomes.

In its planned budget for the previous Iranian year (ended on March 19), the Iranian government had expected to earn some 106 trillion rials (about $2.5 billion) of income from divesting shares of sate-run companies to the private sector.

The plan was set to continue in the current calendar year to offset some of the budget deficit.

In early March, Iranian Finance and Economic Affairs Minister Farhad Dejpasand said offering the shares of state-owned companies, which are planned to be privatized, would be sped up.

He further highlighted that Iran’s stock market is reaching its real status, adding, “People are gradually getting acquainted with the capital market’s potential and welcoming it.”

Dejpasand had previously said that the government should amend its policies and methods of setting the prices and transferring the shares in the process of privatization.

In Iran, implementation of privatization plan aimed at more productivity, investment making, job creation, promotion of trade balance, more competition in domestic economy, and reducing financial and management burden on the government has been under the spotlight over the past decade.

The law on implementation of the general policies of the Article 44 of Iran's Constitution on privatizing state-owned companies was declared in 2006 in a bid to downsize the government and promote the private sector’s role in the national economy.

The government envisioned a large privatization program in the Fifth Five-Year National Development Plan (2010-2015), aiming to privatize about 20 percent of the state-owned firms each year. Under the present interpretation of the Article 44, some state-owned companies have been privatized to reduce their financial burden on the country’s budget and also increase their productivity.

Downsizing the government is on the agenda, but a number of factors has been hindering privatization trend in the country, among them government’s high interference in the management of the transferred companies is a challenging one.