Privation Commission clarifies news item regarding proceeds
By Asad Cheema

ISLAMABAD—Ministry of Finance has never treated privatisation proceeds as government revenues and whenever the proceeds are received, they automatically displace debt of the Government, a spokesman of the Privatisation Commission said here.
He was commenting on certain news items and comments appeared in the section press which created an impression that privatisation proceeds have not been used by the Government for debt retirement and poverty alleviation as required by law.
“This understanding and impression is not based on correct appreciation of facts” he remarked.Clarifying the reports, he said that Ministry of Finance has never treated privatisation proceeds as Government revenue.
He added that the gap between Government revenue and Government expenditure is the deficit, which is financed through Government borrowings.
The spokesman said that the deficit level is fixed at the time of budget approval and remains unaffected by privatisation inflows.
“Whenever privatisation proceeds are received, they automatically displace debt of the Government”, he remarked.
He further said that the Ministry of Finance also formally advises the State Bank of Pakistan to apply 90% of the proceeds towards retirement of the most expensive debt.
“Now the Finance Ministry has issued standing instructions to the State Bank to automatically retire debt to the extent of 90% of the proceeds so received without seeking further guidance from the Ministry on individual receipts”, he added.
He said that for poverty alleviation the expenditure is made through the budgetary process with the approval of the Parliament as prescribed by the Constitution.
Currently, he said that the expenditure incurred on poverty alleviation is much more than 10% of privatisation proceeds received by the Ministry of Finance in any year.
He said that it also needs to be reaffirmed that the privatisation proceeds are received by the Ministry of Finance only into the Federal Consolidated Fund.
As regards the Privatisation Commission, he further clarified that in line with the terms of Privatisation Commission Ordinance 2000 for each transaction the Commission remits the proceeds to GoP after making payments to owners other than the government whose shares are sold and meeting direct transaction costs of the privatised assets.