privlec - First steps to privatization (early 1992): small...

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First steps to privatization (early 1992): small shops and restaurants privatized Needed to develop a strategy for larger enterprises. Two tracks: one for the insiders, one for the public at large. ‚Land should go to the tiller‛ (employees and directors should be entitled to a substantial share of enterprise assets)
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Funding enterprise purchases $ Virtually no surplus funds available in the Soviet years (to prevent unauthorized activities etc) $ Some money held as cash balances (funds for workers’ wages etc) $ Majority in the form of clearing accounts $ 1987: enterprise managers allowed to profit from surplus after plan is fulfilled $ Need funds: positive cash/clearing accounts become a valuable resource $ Intermediaries arise to link supply and demand
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Funding enterprise purchases (cont.) These intermediaries got to look a lot like bankers; commercial banks legalized in 1988 Most banks issued short term loans (e.g. 6 months) Were used by insiders to gain control of enterprises they managed Once enterprise assets were privatized, enterprise cash could be used to pay off the loans
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privlec - First steps to privatization (early 1992): small...

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