Islamabad, Dec 17: The International Monetary Fund (IMF) has agreed to key measures to support the privatization of Pakistan International Airlines (PIA), including sales tax exemptions and the elimination of equity losses, sources revealed.
The agreement includes sales tax exemptions on the purchase or lease of aircraft for both domestic and international routes. This exemption, alongside the elimination of losses, is expected to increase PIA’s bidding value from Rs. 250 billion to Rs. 350 billion.
To pave the way for privatization, the government has transferred Rs. 660 billion of PIA’s debt to a holding company. Proceeds from PIA’s privatization and the sale of the Roosevelt Hotel will be used to settle outstanding liabilities. The IMF has approved the debt settlement plan for the holding company.
A joint venture for the sale of the Roosevelt Hotel, valued at approximately $1 billion, is also in the pipeline, with expectations for completion within six months. Initially, the IMF had allowed sales tax exemptions only for international routes. Following a renewed request, the exemption was extended to domestic routes as well. PIA’s leased aircraft will now enjoy a monthly tax relief of Rs. 8.1 million, further aiding the privatization process.
The Prime Minister has been briefed on these developments, which are seen as critical steps in ensuring the success of PIA’s privatization while addressing its financial challenges.
