Posted on 02/22/2008 1:58:01 AM PST by King Lazar
Serbia to roll out €30bn sell-off
By Stefan Wagstyl and Neil MacDonald in Belgrade
Published: February 21 2008 19:03 | Last updated: February 21 2008 19:03
Acting in the teeth of the Kosovo crisis, the Serbian government is rolling out eastern Europe’s biggest privatisation programme.
The planned sale of companies is worth an estimated €30bn ($44bn, £23bn), which will include the mass distribution of free shares to about 4m people.
With privatisation mostly complete in other ex-communist states, the programme is certain to attract interest from international bankers and institutional investors.
The plan could prove controversial for ethnic Serbs because many of the ethnic Albanians who form 90 per cent of the population of Kosovo – which declared its independence from Serbia this week – are eligible for the free shares programme. Belgrade is ignoring the independence declaration and continues to regard the residents of Kosovo as Serbian citizens.
“It is my idea to push ahead with process of privatisation,” Mladjan Dinkic, the finance minister, told the Financial Times in an interview. “The recent presidential elections showed a lot of people are unsatisfied [with living standards]. We want to give them some gains.”
The three-year privatisation plan is due to begin with an initial public offering of Telekom Srbija, the state-run telecoms company, and continue with the sales of shares in EPS, the electricity utility, JAT, the national airline, JAT’s maintenance company, Belgrade airport, and Galenika, the pharmaceuticals maker.
Serbs qualifying for shares will receive about 15 per cent of the total stock – worth an estimated €4bn, or about €1,000 each. The scheme will cover about 4m adults: those who did not receive free shares in previous privatisations, for example through employee or pensioner programmes. The recipients will be free to sell their stock six months after the distribution.
The government is responding to widespread frustration among Serbs who feel only a rich few are benefiting from strong growth. Economic disaffection as much as concern over Kosovo has boosted support for the hardline opposition to Boris Tadic, the liberal president who narrowly won re-election this month. Mr Dinkic, one of the main architect’s of the economic reforms launched after the overthrow of the late Slobodan Milosevic in 2000, said: “We want to promote greater equality in society.”
The minister insisted the free share plan would be nothing like the widely criticised mass privatisations in central Europe in the early 1990s, notably in the Czech Republic. Those schemes ran into trouble because recipients were frequently unaware of the true value of stock and sold to entrepreneurs who seized control of important companies for little money. Mr Dinkic argued that, unlike the Czech Republic, Serbia was at the end of the privatisation programme, so citizens were familiar with the process.
So far, more than 2m people have registered for free shares at Serbia’s 3,500 post offices since registration began at the start of the month. A Serbian post office controller in a Kosovo Serb enclave said: “We are dealing with the applications for the free shares in the same manner as any other post office in Serbia. Whoever submits valid documentation is equally treated. I cannot tell you how many Albanians applied so far, but definitely it is not a small number.”
Serbia has implemented wide-ranging reforms in the past six years. Mr Dinkic estimated that the increase in gross domestic product this year would be nearly as strong as last, which was above 6 per cent, the highest in south-east Europe.
Copyright The Financial Times Limited 2008
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