"State-owned enterprises are one of the main causes of inefficiency in emerging countries, and in addition, there is the most untapped potential that these countries can use effectively to revive the economy in the post-COVID period," former Georgian Prime Minister Nika Gilauri writes in an analytical article for Forbes Georgia.
Nika Giali reviews the new ideas for overcoming the post-pandemic economic crisis, and among them is the importance of corporatizing state-owned enterprises.
According to Nika Gilauri, initially, the country must establish the so-called risk map. The existence of a risk map helps the country to attract foreign companies and financial resources better. When a country does not have a risk map, it only increases investment risks and consequently increases the value of the loan and decreases the price of assets.
The second is that the management of a state-owned enterprise must develop a transparent policy and introduce the best international standards of corporate governance.
Nika Gilauri notes, that the third important thing is that the company's managers are the advertising agents for both the government and county on the international market, which means that they must be in constant communication with investors and provide them with information about the country. It is important that investors are also interested in creating a better platform for promoting the country, which would otherwise be irrelevant to them.
„It should be noted that despite many mistakes and criticisms, over the last few decades, international financial institutions have been successfully assisting developing countries in their fight against the poverty. There were also a few changes in their policies that were most effective.
Now that the pandemic has virtually damaged all existing economic policies of emerging countries, it is also important that international financial institutions to adopt the new reality and change policies. Saving the SME sector and helping developing countries attract new investment, rehabilitate state-owned enterprises and develop transparent financial assistance rules - these may be the best role that IFIs can play in overcoming the COVID-induced economic crisis”, Nika Gilauri writes.
