IMF Approves Tax Exemptions for PIA Privatisation

The International Monetary Fund (IMF) has approved sales tax exemptions and removal of equity losses for Pakistan International Airlines (PIA) to boost its privatisation process. The exemptions now apply to purchasing or leasing aircraft for both domestic and international routes after negotiations. With these exemptions and the removal of losses, the airline’s bidding value could increase from Rs250 billion to Rs350 billion, sources revealed. PIA’s Rs660 billion debt has been moved to a holding company under government responsibility, and proceeds from the privatisation and Roosevelt Hotel sale will settle the airline’s obligations. The IMF has also approved settling the holding company’s debt.

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The Roosevelt Hotel sale, valued up to $1 billion, will involve a joint venture within six months. Sources further confirmed that PIA’s leased aircraft could save Rs8.1 million monthly due to tax relief. Operationally, PIA faces challenges with 17 grounded aircraft out of its 34-plane fleet, including 7 out of 12 Boeing 777s, 7 out of 17 Airbus A320s and 3 ATR planes. Additionally, PIA announced reduced fares for international flights after an IMF-approved FED waiver. Passengers travelling to the USA could save Rs350,000, while flights to Africa and the Middle East may see a Rs105,000 drop. Those flying to Europe, Australia, and the Far East could benefit from savings of up to Rs210,000.