Current balance of payment deficits.

Socialist-era factories were run according to economic plans, accompanied by bogus price mechanisms. E.g. Aluminum Factory needed bauxit from Bauxit Mine whatever happened, and the price of the bauxit was not shaped by market forces, but fixed by administrative measures. Also, Aluminum Factory was also fixed to have a 'buyer', say, Car Factory, who would buy up all the aluminum no matter what at fixed prices.

With the transitions to democracy and freemarket capitalism, the international superstructure, the Comecon, as well as the respective national structures of the planned economies disintegrated. But many of these factories kept chugging on irrespective of the fact that now they had to buy stuff at market prices and nobody guaranteed them that there were buyers for their end product, as Western producers quickly moved in on the new markets. This ran up huge deficits for the now democratic East European states, which had no tools to run these factories / state-owned companies profitably. Whole economies crashed from one year to the next (Hungary, I think dropped 40 percent in 1990).

Rampant corruption and theft obviously didn't help the matter.

Western advisors and factory managers who fancied themselves as owners both tried to convince governments that they had no business in trying to run companies.

But the main reason for privatization was that there was an immediate need for cash to cover the deficits run up by unprofitable companies, which could be solved by selling off potentially profitable companies.