Pakistan’s caretaker cabinet has granted approval for the privatization plan of the flag carrier Pakistan International Airlines (PIA), according to a statement from the prime minister’s office on Tuesday. This decision comes shortly after the election panel urged the government to “refrain” from finalizing any deals concerning PIA.
The caretaker government has expedited the process of putting the loss-making airline up for sale following the completion of a restructuring plan, as reported by Reuters. Officials had previously indicated that the restructuring plan would be greenlit before the national election scheduled for February 8.
The approval from the cabinet was based on the recommendation of Pakistan’s privatization commission, which is tasked with selling off all loss-making state-owned enterprises (SOEs).
The restructuring plan, formulated by transaction adviser Ernst & Young, has resulted in the division of PIA into two entities: one ‘clean’ entity and the other to be housed in a holding company with legacy debt. The latter entity comprises negative equity of 825 billion rupees ($2.95 billion) in loans, creditors’ money, and losses. The clean entity is slated for sale.
A statement from the prime minister’s office highlighted, “These steps will help attract investors towards PIA.”
Pakistan, grappling with a deep economic crisis, entered into an agreement last June to revamp the SOEs under a deal with the International Monetary Fund (IMF) for a $3 billion bailout package.
The decision to privatize PIA was made by the outgoing government shortly after signing the IMF agreement.
The caretaker administration, which assumed office in August to oversee the February 8 election, was granted authority by the outgoing parliament to take necessary measures to meet the budgetary targets agreed upon with the IMF.