In order to secure a bailout deal with international creditors, Greek Prime Minister Alexis Tsipras had agreed to establish a fund that would monetize 50 billion euros of Greek public assets through privatizations and other means. The fund’s headquarters will be located in Athens.
25 billion euros of this money will be go toward recapitalization of Greece’s devastated banking sector. 12.5 billion euros will be used to pay of part of the country’s debt and the usage of the remaining 12.5 billion euros will be up to the Greek government’s discretion.
Beyond these agreed terms, little was known about the fund. On Friday, senior officials of the Greek Finance Ministry shed some light on the fund’s details and the Ministry’s plan for it.
Greece’s Finance Ministry attempted to distinguish the fund from the previous privatization fund, the Hellenic Republic Asset Development Fund (HRADF), by comparing it to systems in Norway and other countries.
The 50-billion-euro target will be generated over a 30-year time period. The Greek government will be responsible for the fund while the European Commission will supervise.
The public assets the fund will monetize include stocks, Greek state-owned real estate, state-owned infrastructure companies and potentially profits from the extraction of Greek natural resources.
The Greek Finance Ministry pointed out the importance of designing alternatives to privatizations. The monetization by “other means” could take a number of forms, including private ownership for a fixed amount of time as well as securing money inflow from operations of private owners. For instance, the fund could get some money for each container transported by train.