Option 5 of 8

Sell or lease what the state owns

Raise cash by selling or leasing land, ports, companies or shares, and use it to repay.

Ways out of debt

In the house

Sell the second car, or rent out the spare room, and put the money against the loan.

The idea

The state owns land, buildings and companies. Selling or leasing some of them brings in a lump sum. Some state-owned companies also lose money each year, and a sale can end those losses.

How it works

  1. List the assets and decide which can be sold or leased.
  2. Find buyers or partners and agree a price in an open process.
  3. Use the proceeds for debt or reserves.

How long

A single deal can take a long time to prepare. The money arrives once.

Who has to agree

Buyers or investors, and public acceptance.

Who feels it first

Workers and customers of the asset sold, and the public who may value it as national property.

What makes it hard

  • The price depends on what buyers will pay, which is lower when the seller is under pressure.
  • Lease or sale is permanent, while the benefit is a single payment.
  • Public views on selling national assets are often strong.

How people and the world may react

Households

Opinions are divided. Some see a way to stop losses, others see a loss of national property.

Businesses

Investors need clear rules and a fair process before they bid.

Lenders and other countries

Lenders welcome cash and reform of loss-making firms. The terms of any deal, including who the buyer is, can draw attention from other countries.

Pros and cons

Pros

  • Raises cash without a tax rise or a cut.
  • Can end the losses of loss-making firms.
  • A new owner may invest more.

Cons

  • A one-off payment, and the future income from the asset is given up.
  • Sale prices can be low when time is short.
  • Can be politically sensitive.

A real example

Hambantota Port, 2017

In 2017 a 70% stake in Hambantota Port was leased to China Merchants Port Holdings for 99 years for US$1.12 billion. According to The Diplomat, the money went to foreign reserves and short-term debt, not to the loans used to build the port. Other reports describe the use of the money differently.

Sources:

These pages describe options and what happened when countries tried them. Budgets LK does not recommend any option, and nothing here is a forecast or financial advice.