Ahead of elections next week, Pakistan’s caretaker administration is making binding plans for a new government to sell loss-making Pakistan International Airlines (PIA), according to the minister in charge of the process and other officials.
In the past, elected governments have shied away from undertaking unpopular reforms, including the sale of the flag carrier. But Pakistan, in deep economic crisis, agreed in June to overhaul loss-making state-owned enterprises under a deal with the International Monetary Fund (IMF) for a $3 billion bailout.
The government decided to privatise PIA just weeks after signing the IMF agreement.
The caretaker administration, which took office in August to oversee Thursday’s election, was empowered by the outgoing parliament to take any steps needed to meet the budgetary targets agreed with the IMF.
“Our job is 98 per cent done,” Privatisation Minister Fawad Hasan Fawad said when asked about the plan to sell the airline. “The remaining 2pc is just to bring it on an excel sheet after the cabinet approves it.”
Fawad said the plan, drawn up by transaction adviser Ernst & Young, will be presented to the cabinet for approval before the tenure of the administration ends following the election. The cabinet will also decide whether to sell the stake by tender or through a government-to-government deal, Fawad said.
“What we have done in just four months is what past governments have been trying to do for over a decade,” Fawad said. “There is no looking back.”
PIA had liabilities of 785 billion Pakistani rupees ($2.81bn) and accumulated losses of 713bn rupees as of June last year. Its chief executive has said losses in 2023 were likely to be 112bn rupees.
Progress on the privatisation will be a key issue if the incoming government goes back to the IMF once the current bailout programme expires in March. Caretaker Finance Minister Shamshad Akhtar said last year that Pakistan would have to remain in IMF programmes after the expiry.
Sources said a 51pc stake with full management control would be offered to buyers after parking the airline’s debts in a separate entity, under the 1,100-page report from Ernst & Young.
PIA spokesman Abdullah Hafeez Khan said the airline was assisting the privatisation process, extending “full co-operation” to the transaction adviser.
Besides operational and technical measures for PIA’s divestment, the caretaker government has also amended a 2016 law that had blocked selling off its majority shares, according to a draft posted on the Pakistan parliament’s website.
The Pakistan Muslim League-Nawaz party of former Prime Minister Nawaz Sharif is tipped by analysts to win the election with support from the powerful military. Its main political rival has been decimated by the arrest of its leader Imran Khan and a crackdown on its members.
Sharif’s close aide Ishaq Dar, who has been his finance minister previously and has been named by the party to retain the portfolio if it forms the next government, said that the sale of PIA will be fast-tracked.
“It will, God willing, move ahead with fast speed,” he said.
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