“We’ve finished 98% of our work,” a Pakistani minister said of the plan to sell the national airline, even before of polls

Pakistan’s interim government is preparing for the impending divestiture of the financially challenged Pakistan International Airlines (PIA) ahead of the upcoming elections next week. “Our endeavor stands at a 98% completion,” expressed Privatisation Minister Fawad Hasan Fawad to Reuters, addressing the contemplation of selling the airline. “The remaining 2% entails assimilating it into an Excel spreadsheet post-cabinet approval.”

Previous administrations have refrained from implementing unpopular reforms, notably the sale of the national carrier. However, amidst a severe economic crisis, Pakistan consented in June to revamp deficit-ridden state-owned enterprises as part of an agreement with the International Monetary Fund (IMF) for a $3 billion bailout. The caretaker government opted for PIA’s privatization shortly after sealing the deal with the IMF. The interim administration, inaugurated in August to supervise the February 8 election, was authorized by the departing parliament to take any necessary measures to fulfill the budgetary targets aligned with the IMF.

‘NO LOOKING BACK’ Caretaker Minister Fawad affirmed that the proposal, devised by transaction consultant Ernst & Young, will be presented to the cabinet for endorsement before the administration concludes its term post the February 8 election. The cabinet will determine whether to tender the stake or pursue a government-to-government agreement, as outlined by Fawad. “Our achievements in just four months surpass the endeavors of past administrations spanning over a decade,” asserted Fawad. “There is no turning back.”

The details of the privatization process have not been previously disclosed. As of June last year, PIA carried liabilities amounting to 785 billion Pakistani rupees ($2.81 billion) and accumulated losses of 713 billion rupees. The CEO anticipates losses of 112 billion rupees in 2023. Progress on privatization will be pivotal if the incoming government revisits the IMF after the current bailout program concludes in March.

Caretaker Finance Minister Shamshad Akhtar stated last year that Pakistan would need to continue participating in IMF programs post-expiry. Two sources close to the process informed Reuters that a 51% stake, accompanied by full management control, would be presented to potential buyers after segregating the airline’s debts into a distinct entity, per Ernst & Young’s comprehensive 1,100-page report. Fawad refrained from specifying the stake’s size but affirmed the plan entails separating the carrier’s debts into an independent entity.