REASONS AND PRESSURES DRIVING PRIVATISATION
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1. ECONOMIC PRESSURES LEADING TO PRIVATISTION
Privatisation is a critical reform in most developing countries; helping governments design and implement privatisation programs have been a major activity of the World Bank for the past decade and a half. According to the World Banks Group and the IMF, their reasons for pressuring privatisation are:
A. LACK OF CAPITAL:
Many governments are severely indebted and cannot easily raise money. Private capital will then be required to fund projects in developing countries. Also, privatisation will lead to foreign and national investors, coming in to invest capital that will attract national savings and more significantly foreign savings to the economy.
B. REDUCTION OF FISCAL DEFICITS, DIVERTED RESOURCES AND BUDGETS:
A modest improvement in state owned corporation's efficiency would substantially reduce and in some cases eliminate the fiscal deficit in most developing countries.
For Example: In Egypt, Peru, Senegal, Turkey, a mere 5% reduction in public corporations operating cost would reduce the fiscal deficit about a third.
If infrastructure investment is done privately, governments will have "fiscal space" to channel public finance into social services and not divert them into the public enterprises...