IMF greenlights debt rescheduling plan for PIA’s privatisation

ISLAMABAD: The International Monetary Fund (IMF) has granted approval for the debt rescheduling plan aimed at facilitating the privatisation of Pakistan International Airlines (PIA), according to sources within the Privatisation Commission (PC).

The final approval for this crucial plan is anticipated to be sought from the federal cabinet, marking a key step forward in the government’s efforts to revamp the national carrier.

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Sources within the Privatisation Commission and the Finance Ministry have revealed that the IMF has given its nod to the PIA privatisation plan. As part of the agreement, the IMF has also agreed to cover the interest on PIA’s loan to the government for a one-year period, providing a temporary financial reprieve.

The government is set to repay a substantial loan of 208 billion at a 12% interest rate to commercial banks for the year. Negotiations between officials from the Ministry of Privatisation and the Ministry of Finance with IMF representatives have been deemed successful, paving the way for the imminent implementation of the debt rescheduling plan.

Emphasising the need to alleviate the burden on banks, the IMF has advocated for not extending interest payments on PIA loans beyond the one-year mark. The accelerated privatisation of PIA within the next year is anticipated, with a comprehensive debt repayment plan set to be formulated.

Sources have suggested that discussions are underway regarding the possibility of using dividends from assets such as Valet Hotel and PIA to establish a robust debt repayment strategy. The government aims to expedite the privatisation process, leveraging the conclusion of the payment charge on PIA by commercial banks.

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This week is expected to witness continued deliberations between Pakistani officials from the Privatisation and Finance Ministries and their counterparts at the IMF, as they fine-tune the details of the PIA loan rescheduling plan. The outcome of these discussions is likely to shape the trajectory of PIA’s privatisation and the associated financial restructuring efforts in the coming months.