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I encountered this question while doing CIMA exam kit. Does anyone can explain why “the money goes to the government under privatisation” please?
Question: When privatisation takes place, ______ .
Answer: assets are transferred from the public sector and money goes to the government.
Privatisation is then a government-owned organisation is moved to the private sector.
For example, until the 1980’s the UK telephone system was owned by the state. The government privatised it by moving its assets into a new company (British Telecom, or BT) and then sold shares in that company to private investors. The government receives the proceeds of the share issue.
Ah I see. I thought the money was referring to the profit earned by the privatised companies. Thank you for your explanation.
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