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Belarus to resume privatisation this year

SOFIA: Belarus will resume privatisation this year but will sell companies for cash rather than distributing them to people in mass sell-off programmes, a senior minister said.

"We slowed down the tempo of privatisation because we noted the negative fact of privatisation in Ukraine and Russia," Deputy Prime Minister Leonid Sinitsyn said.

"The process that happened there, fast mass privatisation, given the mentality of our people, was something we didnt want," he told a presentation at the annual meeting of the European Bank for Reconstruction and Development.

Belarus is trailing other reforming East European countries in privatisation.

Sinitsyn said that the "non-state sector" now accounted for 26.7 percent of output, a much smaller share than in its neighbours.

Russia privatised over 17,000 companies in 1993 and 1994 in the biggest transfer of property in history by issuing its citizens with vouchers which they could use to buy shares in state-owned companies.

Similar schemes were used in countries such as Slovenia and former Czechoslovakia, which pioneered the method.

But although the system resulted in a rapid transfer of enterprises from state ownership, it was criticised as corrupt.

Ordinary Russians often did not understand the value of their vouchers and sold them for a pittance, while in many cases Soviet-era managers were able to manipulate the system to end up as owners of their companies.

"Our people are concerned by the very high level of criminality in the privatisation process, so that's why we're holding back," Sinitsyn said.

He said 516 companies, employing 300,000 people, would be privatised this year, in addition to 2,000 already sold off.

"Our policy will be to use cash privatisation, but we will maintain the legal right of all citizens to voucher privatisation," he said.

Selling companies for cash rather than vouchers has the advantage of raising capital for the company or the government, and can result in strong shareholders providing sound corporate governance, but it is slower than the voucher method.-Reuter