HBL’s stake sale proceeds shown as profit of State BankArchive
KARACHI: The government seemed to have resorted to creative accounting as it kept Habib Bank’s (HBL) privatisation proceeds in the profits of the State Bank of Pakistan (SBP) under the head of non-tax revenue collection.
During a press briefing on Saturday, SBP Governor Ashraf Mahmood Wathra confirmed that the sale of “the remaining shares of the HBL was kept in the books of the State Bank”.
Independent economists and analysts find it hard to digest this as they say such proceeds should be in government’s accounts under the head of privatisation proceeds.
The government sold its entire 41.5 per cent stake, or 609 million shares, in the country’s largest private-sector bank for $1.02 billion.
HBL, formerly known as Habib Bank Limited, was partly privatised in 2004 through which Aga Khan Fund for Economic Development acquired 51pc of the bank’s shareholding and management control.
The bank is 7.5pc owned by the general public — by over 170,000 shareholders —following the public listing that took place in July 2007.
By including HBL’s privatisation proceeds in the SBP’s books, the government tried to increase its revenue collection up to the acceptance level of the International Monetary Fund. The Federal Board of Revenue failed to meet the revenue collection target during the previous fiscal year despite the fact that it was reduced thrice, from Rs2.810 trillion to Rs2.605tr.
However, had the HBL’s sale proceeds excluded from the collection (Rs2.580tr in FY15), the amount would have been much lower. The government earned $1.02bn through the HBL sale, including a foreign exchange component of $764m.
On the other hand, to reduce the fiscal gap the government excluded circular debt (which was estimated at about Rs600bn in May) out of the budget, while experts doubted that the provincial cash surplus was overstated. This was also in line with the IMF’s condition to bring down the fiscal deficit to 4.3pc of GDP. However, the government managed to contain the deficit at 5pc in FY15.
Published in Dawn, July 26th, 2015
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