As Pakistan gears up for elections on February 8, the caretaker administration is finalizing plans to sell the financially struggling Pakistan International Airlines (PIA).
The move, considered a bold step in light of past government hesitations, comes as part of the country’s commitment to reform state-owned enterprises under a $3 billion bailout agreement with the International Monetary Fund (IMF).
The decision to privatize PIA was made just weeks after the signing of the IMF agreement in June. The caretaker administration, in power since August and tasked with overseeing the upcoming elections, has been granted authority by the outgoing parliament to take necessary measures to meet IMF-imposed budgetary targets.
Minister for Privatisation Fawad Hasan declared, “We’re 98% done,” expressing confidence in the progress made. The other two percent, he clarified, is going to the cabinet to solicit approval for the plan, which was created by transaction adviser Ernst & Young. The cabinet would decide whether to sell the stake through a government-to-government agreement or a tender process, Fawad said.
A 51% stake in PIA with complete management control will be sold, according to the report from Reuters, which is anticipated to be unveiled before the caretaker administration’s term ends after the election. In the extensive 1,100-page report from Ernst & Young, it is explained that the airline’s debts would be divided into different entities to ease the process of privatization.
The accomplishments of the caretaker administration were highlighted by Fawad, who pointed out that they completed in four months what previous administrations had found difficult to complete in over a decade. The next government’s decision is likely to be heavily influenced by the status of PIA’s privatization, particularly if they plan to ask the IMF for more funding after the current bailout programme ends in March.