ISLAMABAD, April 13: Finance Minister Shaukat Aziz on Tuesday told the Senate that the SME Bank was being restructured for privatization in the next three years.

The restructuring was necessary because of the financial health of the bank, which was being done with the approval of its board of directors, the State Bank, finance ministry and the Asian Development Bank. During the process eight unviable branches had been closed down, he said.

However, he assured the Upper House that the services of the surplus staff were not being terminated but laid off under voluntary separation scheme. The minister said the SBP had also revised the prudential regulations of the SME Bank to simplify the lending procedures for the small and medium enterprises.

To another question, the minister said a fund of Rs2 billion was raised through donations under the National Debt Retirement Programme (Mulk Sanwaroo Qarz Utaroo Scheme) during the Nawaz Sharif government, which was utilized to retire the debt through the formal debt retiring mechanism.

He said 164 multinational companies and 14 foreign banks were presently operating in Pakistan of which 107 multinational companies invested Rs53.4 billion ($948,993) from 1999 to 2001.

The SBP was collecting the data of the remaining 57 companies. Similarly the foreign banks brought a foreign exchange of Rs19.6 billion during the same period, he said.

The amount of the federal taxes (sales tax, import duty and withholding taxes), paid by these multinational companies and foreign banks during 1999 to 2002 stood at Rs177.7 billion.

The cumulative profit/dividends remitted abroad by the 14 foreign banks during the same period stood at Rs3.9 billion. However, the data of the multinational companies was still being collected by the SBP through a survey.

About the fiscal deficit in the federal budget from 2000 to 2004, he said the deficit was Rs763 billion - Rs185.7 billion in 2000-01, Rs212.2 billion in 20001-02, Rs186.4 billion in 2002-03 and Rs179 billion in 2003-04.

The minister, however, assured the house that steps have been taken to reduce the fiscal deficit for the year 2004-05 through fiscal management reform programme, besides a debt office has been established to reduce the debt burden, tax structure and tax administration reforms were being implemented and expenditure management was also being improved.