Advisory services for the Moldovan privatisation agency

Project description

Title: Advisory services for the Moldovan privatisation agency
Commissioned by: German Federal Ministry of Finance (BMF)
Country: Republic of Moldova
Lead executing agency: Agenția Proprietăți Publice (Public Property Agency, privatisation agency) in the Ministry of Economy of the Republic of Moldova
Overall term: 2016 to 2017

Moldova. A Moldovan delegation visits the German Federal Ministry of Finance. © GIZ

Context
The privatisation of state-owned property in Moldova is a key condition for the introduction of far-reaching economic reforms. However, the privatisation process is making slow progress, and the results to date have remained modest. The Public Property Agency still looks after the interests of several hundred companies, including joint-stock companies and state-owned or municipal non-commercial enterprises. The latter, in particular, are still not subject to market economy rules, and are largely supported by the state or municipalities. Given these circumstances, Moldova has confirmed its keen interest in receiving advisory support on privatisation and improving state asset management.

Objective
The Moldovan privatisation agency has at its disposal methodologically sound privatisation procedures and modern instruments for administrating state-owned property.

Approach

The main focus of the advisory services is to support the ongoing privatisation process. This involves analysing and examining weaknesses in current administrative and privatisation procedures and the corresponding legal regulations. Dialogue and advisory sessions then take place based on the findings of these problem analyses.

The forms of advisory support vary. They range from working meetings with individuals, generally agency directors, vice ministers and company directors, to brainstorming meetings with small groups of privatisation agency employees, training events and fact-finding visits for agency employees and staff at the ministries involved. In addition, the project prepares written inputs on issues relating to privatisation and state asset management, and presents these to the project partners.

Results
Proposals drawn up based on the problem analyses carried out to date have improved the administrative procedures at the Public Property Agency. These cover, for example, the standardised registration of state assets and standardisation of decision-making processes. This helps ensure that privatisation projects are carried out more effectively and more transparently.

In light of the current economic crisis in Moldova, which was triggered by the Ukraine crisis, the Russian embargo on exports and the internal banking crisis, a catalogue of measures has been developed to enable the privatisation process to continue throughout the crisis. The catalogue includes turnaround and restructuring measures at the companies to be privatised, new social measures to accompany the privatisation process, measures to utilise state aid, and measures designed to return a symbolic price on the privatisation of any unprofitable companies or companies that, despite minor operating profits, are unable to deleverage. Extensive know-how on these topics has been made available to employees of the privatisation agency.

As a result of the development measure, the Moldovan privatisation agency increasingly applies modern, methodologically sound, standardised and transparent privatisation procedures. Methods and instruments are continuously being integrated by the government into the legal framework for privatisation. This way, the know-how conveyed and the impact of the project’s development policy are anchored and secured in the country’s legal foundation. The positive results of the project are also clearly evident from the increasing privatisation dynamics and rising privatisation proceeds, which are of great importance to the Republic of Moldova in view of the tight budgetary situation.

Moldova. Seminar in Chisinau. © GIZ

Contact

Jens Kipper
jens.kipper@giz.de