The International Monetary Fund (IMF) has approved Pakistan’s conditions for the privatization of Pakistan International Airlines (PIA).
According to the sources, the IMF has agreed to key conditions, including the removal of the sales tax on aircraft purchases or leases for potential buyers and the resolution of equity losses tied to PIA’s privatization.
With the IMF’s approval, buyers will now be exempt from sales tax when purchasing or leasing aircraft for any route. These exemptions, along with the resolution of equity losses, could boost PIA’s bidding value to as high as Rs350 billion. Additionally, PIA’s lease agreements will benefit from monthly sales tax exemptions of approximately 8.1 million rupees.
In a related development, the government has restructured PIA’s debt by transferring the 660 billion rupee liability to a holding company. Proceeds from the sale of the Roosevelt Hotel will be used to clear the debts of the PIA Holding Company, with the IMF granting approval for this transaction.
The Roosevelt Hotel is expected to generate up to 1 billion dollars through a joint venture sale within six months.
Prime Minister has been briefed on the sales tax exemptions, the elimination of equity losses, and the planned joint venture sale of the Roosevelt Hotel. Initially, the IMF approved the exemption of sales tax for aircraft purchased or leased for international routes. However, following further discussions, the exemption has now been extended to include aircraft for domestic routes as well.
