VILNIUS — Last week the Lithuanian government’s Sunset Commission issued a stinging report on state-run companies, arguing that no new ones should be established and existing ones be reformed or sold off.
The commission, made up of various vice ministers, think-tank academics and economic analysts, is tasked with finding ways for government bodies to be run more efficiently and effectively. It issued this report after examining audits of state-run companies. One member is Rūta Vainienė, the president of the libertarian Lithuanian Free Market Institute, and the commission’s findings bear the influence of her organization as well as those typical of a center-right government.
“Commission members unanimously stressed that the state enterprise status is obsolete, no longer of interest, and endangered the legal form,” the press release reads. “Therefore, setting up new state enterprises is not appropriate and current ones should be more closely monitored. The Sunset Commission agrees that the list of 108 public companies list in operation should be reduced.”
Some Lithuanian state-run companies such as Lietuvos Paštas have been prone to corruption and fiscal mismanagement. Others such as LEO LT have been criticized as serving monopolists more than the general public.
However, some companies fared better in state hands than private ones, such as the now defunct flyLAL. Although unprofitable under government management, it at least provided reliable direct flights to the Lithuanian capital for over a decade. After being privatized in 2005, it lasted only four years before shutting down, cutting the country off from the rest of the continent and damaging the country’s tourist industry.
It’s not clear exactly how the commission’s recommendation will affect government policy. A Lithuanian Free Market Institute representative resigned from a previous incarnation of the commission after deciding that not enough progress was being made, and Vainienė has not hide her criticism of the current government. The prime minister’s office said that not specific proposals reflecting the commission’s findings is being drafted, but that it likely will in the future.
“I don’t know exactly when we’ll prepare new proposals, but it will come through the government,” Ridas Jasiulionis, an adviser to the prime minister, told Baltic Reports.
Given the national government’s fiscal problems, revenue from selling state-owned companies could be another motivation for a privatization drive.
