.
With the national wealth fund years away from being established and eventually earning revenues from our share of future gas production, and with the Troika of international lenders (primarily the ECB) breathing down our necks for initial repayments some time after 2018, selling off state assets is not a bad thing after all.
The privatisation of some state-controlled enterprises is expected to generate about 1.4 bln euros for the cash-strapped government which is still dragging its feet over cutting back on the civil service payroll, not realising that development and growth can only come as part of a balanced budget and a streamlined public workforce.
And privatisation does not necessarily mean selling off prized national jewels to bloodthirsty foreigners. Quite the contrary, the well-to-do pension funds could end up buying large chunks of the utilities or government services where their own members are employed, ensuring that they also have a say in running those companies. Ironically, what the revolting trade union bosses have not realised is that this will only come after these state enterprises have been “privatised”, with the government holding on to a golden share or at least a controlling stake, for the time being.
The Cyprus Stock Exchange, having survived two decades of booms and bust, has now matured and is ready to undertake the partial listing of shares in state companies, where serious funds would be keen to invest their money with the intention of getting a solid return.
The banking sector, which is about to be scrapped, could eventually be replaced with one that will include shares of former state enterprises such as Cyta, the EAC, the Ports Authority and even, some day, the shares or bonds of the Hydrocarbons Sovereign Wealth Fund.
Cyprus, as with Greece, is now being regarded as an emerging market where investors are prepared to take a risk and where returns will be more than generous at multiples of current prices.
Now that the Approved Investment Companies have dwindled to a fraction of the value they held a decade ago, these should also be merged in order to invest in local privatisations and even to spread the risk among other investment opportunities throughout the Mediterranean and other emerging markets.
All that needs to happen is for the pension funds to restructure themselves, introduce methods of transparent management and good corporate governance, and for the market to prepare for the eventual return of the Bank of Cyprus stock, estimated some time early next year, so that funds can recoup their losses from the blunders of the Laiki/BOCY resolution and start investing in the future.
