16 Apr 2024
Wednesday 16 October 2019 - 17:40
Story Code : 361559

Iran faces challenges in privatization plans

Al-Monitor | : One of the impacts of the current US sanctions on Iran is the loss of income as a consequence of lower oil export revenues. To make up for the lost inflows into the state budget, the government has increased its efforts to sell its shares in large Iranian enterprises. Since most of the shares sold on the capital markets end up in the hands of semi-state entities, the process will have both economic and political consequences.

Privatization has been on the Iranian governments agenda since the early 1990s, but it faced major legal obstacles until the mid-2000s. Indeed, Article 44 of the Iranian Constitution, which calls for all major industries to be dominated by the government, impeded the process.

As such, the path to a higher volume of privatization was paved in 2004, when major regime figures, including Supreme Leader Ali Khamenei, agreed on how to withdraw the government from major economic activities. Essentially, the new interpretation of Article 44 defined the governments dominance through control over all regulatory entities as well as a minimum 20% share for the government in all privatized entities.

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