IMF 'approves' Pakistan's conditions for PIA privatization

The International Monetary Fund (IMF) has ‘agreed’ to Pakistan’s conditions for International Airlines (PIA) privatization, ARY News reported on Tuesday, citing sources.

According to sources, the IMF has reportedly agreed to the elimination of sales tax on aircraft purchase or lease for buyers and the settlement of equity losses for PIA privatization.

With the ‘approval’ of the IMF, the intended buyers will be granted sales tax exemptions for purchasing or leasing aircraft for all routes. The removal of sales tax exemptions and equity losses could increase bidding for PIA to as high as Rs350 billion.

Pakistan International Airlines’ lease agreements will benefit from a monthly sales tax exemption of approximately 8.1 million rupees, sources added.

In another development, the government has restructured PIA’s debt, transferring the 660 billion rupees liability to a holding company, sources confirmed.

Read more: Loss-making PIA to ‘consider’ salary raise of employees

The funds from the sale of the Roosevelt Hotel will be used to settle liabilities, and the IMF has approved the use of these proceeds to clear the PIA Holding Company’s debts.

For the Roosevelt Hotel, a joint venture is estimated to generate up to 1 billion dollars in sales within six months.

Prime minister  has been briefed on the sales tax exemption, elimination of equity losses, and the joint venture sale of Roosevelt Hotel. Initially, the IMF approved sales tax exemption for aircraft purchased or leased for international routes, the sources said.

Upon a subsequent request, sales tax exemption has now been extended for aircraft purchased or leased for domestic routes as well.