The Macedonian Gambit : Enterprise cum Bank Restructuring
The former Yugoslav Republic of Macedonia, supported by a World Bank policy-based loan, is trying a new approach to reform its enterprises. Enterprises will still be privatized as soon as possible, but the government frankly acknowledges that a few...
| Main Authors: | , |
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| Format: | Viewpoint |
| Language: | English |
| Published: |
World Bank, Washington, DC
2012
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/1995/11/696936/macedonian-gambit-enterprise-cum-bank-restructuring http://hdl.handle.net/10986/11643 |
| Summary: | The former Yugoslav Republic of
Macedonia, supported by a World Bank policy-based loan, is
trying a new approach to reform its enterprises. Enterprises
will still be privatized as soon as possible, but the
government frankly acknowledges that a few enterprises have
considerable clout and must be subsidized for political, not
economic reasons. These politically powerful enterprises are
isolated from vulnerable banks, but given a direct subsidy
in exchange for undertaking monitorable reforms. In exchange
for the subsidies, the politically powerful enterprises have
to end value-subtracting activities, break off their
relations with banks, and immediately take steps to
liquidate or privatize constituent units at a pace
determined by the cabinet, where political tradeoffs are
best made. Freezing the debts of the political enterprises
frees banks from the pressure to make more bad loans. So far
this isolation technique shows signs of success, and it
could usefully be adapted by other transforming economies. |
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