Paraguay’s new plan to privatise companies

Paraguay’s new plan to privatise companies
Published: 30 September 2005

Paraguay’s government has asked the International Monetary Fund (IMF) to extend the current economic agreement to give it time to negotiate a new deal that would include private management and injection of private capital into state-owned companies, local press reported.  The landlocked country’s present agreement with the IMF expires September 30, so there is very little time for the government to wrap up all the necessary negotiations for a new three-year accord to last until 2008. 
 
"For the moment we have requested an extension of the current agreement, which in principle expires on the 30th of this month," Paraguay’s central bank chair Mónica Pérez was quoted as saying by newspaper ABC.  The government has asked for a two-month extension to complete an economic plan on which to base the new three-year agreement. This new deal would include a series of structural reforms, which would inevitably affect state-owned companies running deficits. 
 
Four audits of state-owned companies are due to begin this year: telephone firm Copaco; cement maker Industria Nacional de Cemento; water company Essap and oil firm Petropar, said finance minister Ernst Bergen. Once these audits are concluded, a business plan must be presented to the IMF with details of how the companies will be opened up to private sector involvement. 
 
"We are totally open to private sector participation, with the view that administration is passed to the private sector; so that the private sector has an interest in being involved in these companies," Bergen was quoted as saying.  "The auditing will be done with the objective of having a clear view of the [companies’] finances in order to offer them to the private sector to inject capital into them. It is a manner of privatisation," the official added.
 
In July 2002, then President Luis González Macchi was forced to abandon plans to reform state-owned companies due to a wave of protest from groups opposed to "privatisation" of the companies.  Earlier this month, the senate also rejected the bill to revive law 1615 on restructuring public organizations, which would have allowed the government to privatise state-owned companies.