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Greece, Creditors Agree on Creation of New Privatization Fund

Greece's privatizationThe Greek government and the quartet of the country’s creditors on Friday agreed on the terms of setting up a new privatization fund which will replace the existing Hellenic Republic Asset Development Fund (HRADF), thus concluding a part of the negotiating agenda.
Finance ministry officials told ANA-MPA that the agreement envisages the set-up of a fund which will create a reserve of assets worth 50 billion euros in the next 30 years. This will be essentially a state investment fund that will operate completely different from HRADF and will be based on the sovereign fund models in Norway and Australia.
The fact that the fund will have the time to build its asset reserves of 50 billion euros over a period of 30 years will allow the state to implement an asset utilization program, offering more time for more favorable terms in the future. The country’s creditors, like the IMF, have relaxed their targets on privatization proceeds (the IMF expects earnings of 1.5 bln euros by 2018, while the Commission expects 2.5 bln euros). HRADF was expected to raise 6.0 billion euros from privatizations by 2018.
The Fund will include state assets, state enterprises’ shares, infrastructure and real estate assets, with the option of including future revenues from the utilization of natural resources, such as hydrocarbon. Inclusion of any assets in the fund’s portfolio doesn’t necessarily mean they would be sold, as was the case with HRADF.
Out of the 50 billion euros of assets in the Fund, 50% will be used as bank collateral (it is estimated around 10-25 billion euros will be needed depending on banks’ recapitalization needs), while the remaining 50% will be equally distributed to growth (25%) and debt servicing (25%).
The new fund will be based in Athens, it will be controlled by the Greek government while the European Commission will have a supervisory role.
(source: ana-mpa)

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