Pakistan’s government has announced plans to privatize Pakistan International Airlines (PIA). The decision comes on the backdrop of Pakistan securing a $3 billion International Monetary Fund (IMF) bailout in June 2023. The bailout was sanctioned on the condition that the country would be fiscally disciplined, and hence the government has set up a committee to privatise various government assets. PIA is a part of such asset.
The Cabinet Committee of Privatization, chaired by Pakistan Finance Minister Ishaq Dar announced the decision as a part of government’s efforts to generate foreign exchange reserve that can help its ailing economy.
The downfall of PIA started in 2020 with the suspension of its flights to Europe and UK due to fake pilot licence issue. This was followed by freezing of the airline’s accounts by Pakistan's Federal Board of Revenue (FRB) on multiple accounts due to on-payment of debt. Mismanagement of funds followed by rising fuel costs escalated the woes of cash-strapped airline.
The carrier's accounts were frozen as it was required to pay 2.8 billion Pakistani rupees ($9.8 million) in taxes to the FRB. However, PIA contested the amount, asserting that its outstanding tax liability was only 1.3 billion Pakistani rupees ($4.5 million). These financial complications triggered a series of punitive measures, even leading to threats of the managing director's arrest if the funds were not paid.
Last month, Reuters reported that Pakistan will proceed with the sale via tender of a contract to manage Islamabad International Airport (ISB) after consultations with the International Finance Corporation.
Officials said Pakistan was in talks with Qatar to jointly run the terminals at Islamabad, Karachi, and Lahore airports. The Qatar Investment Authority could invest up to $3 billion in Pakistan.