Privatization survey and program design : Ecuador

The report begins by identifying constraints to privatization, such as the GOE"s lack of political leverage (presidential elections are in 2 years), opposition from vested interests, and difficulties in assessing the value of targeted firms. Issues critical to a privatization program, including the designation of a GOE executing body, the identification of accelerated divestiture candidates, divestment procedures, public awareness, the ability to attract foreign investment, and the coordination of divestiture among diverse state agencies, are also discussed. A two-phase privatization program is then outined. Under phase one, the high-level GOE body established to implement the program would require several public Ecuadoran institutions to divest a total of 6 to 8 companies within a few months in order to produce immediate benefits; planning for a more far-reaching phase two program would be also undertaken during this phase. Phase two would expand the divestiture process and initiate additional privatization efforts such as contracting management, liquidating unprofitable enterprises, or establishing employee ownership. The role of technical assistance from USAID/Ecuador in helping initiate the program is outlined. Appendices include a list of selected state-owned enterprises.