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Budget Issues: Privatization/Divestiture Practices in Other Nations

AIMD-96-23 Published: Dec 15, 1995. Publicly Released: Dec 15, 1995.
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Highlights

Pursuant to a congressional request, GAO reviewed the divestiture experiences of other nations, focusing on the: (1) privatization process; (2) valuation and preparation of assets for sale; and (3) use and display of sale proceeds for budgetary purposes.

Recommendations

Matter for Congressional Consideration

Matter Status Comments
Congress may wish to consider ways to neutralize the scoring of privatization proceeds. It would be possible to alter budget rules to permit the use of sale proceeds only to offset any costs associated with implementing the sale plus any loss of net revenues now and in the future. Remaining proceeds could be used to reduce the government's current borrowing requirements.
Closed – Implemented
The Budget Enforcement Act of 1997 changed the budget scoring rules for asset sale proceeds. This change--although not consistent with GAO's specific proposals--was intended to create a more neutral budget situation in which to make decisions about the sale of assets.
The U.S. Government might usefully consider assigning the lead role in all divestiture preparations and management to a central financial agency, such as the Treasury Department.
Closed – Implemented
The Treasury Department is creating an Office of Privatization within the Office of the Undersecretary of the Treasury for Domestic Finance. The fiscal 1997 budget contained $300,000 for the office, and President Clinton has earmarked $300,000 for this office's operating budget in the fiscal year 1998 budget. The office has been given authority for three FTEs and has posted a job announcement for three financial analysts.

Full Report

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Topics

AppraisalsComparative analysisDeficit reductionFederal downsizingForeign governmentsPrivatizationProfitsSalesPrivate sectorMonopolies