Why Should Governments Privatize More After Coronacrisis?

1-why privatization

 

The WSJ Tue, June 16, B10 “Fannie, Freddie Tap Advisory Firms” to advise them on raising fresh capital as they move to exit government control.  Having these mortgage giants reduce dependence on government is a welcome step and long overdue.

Unlike most countries U.S. is already a largely privatized economy. The coronacrisis has increased government role and well as ownership in certain sectors, albeit marginally. It is also an opportunity for governments to reduce ownership in key sectors.

Nearly all governments are running deficits to battle the coronacrisis.  In addition to the traditional privatization route (equity and M&A), governments ought to be looking to alternative forms to support fund raising, enhance risk transfer and governance and introduce private sector efficiencies.  These efforts include real estate monetization, securitization of public sector assets,  PPPs for infrastructure as well as divesting companies and assets where government role should be limited.