Troubled national carrier PIA
gets another Rs4 billion from government
On Monday, Pakistan government
sanctioned a bailout package worth Rs4 billion to cover the interest expenses
on Pakistan International Airlines' (PIA) legacy loan.
The Finance Ministry stated that the Economic Coordination Committee (ECC) of the Cabinet, chaired by Finance Minister Ishaq Dar, approved a supplementary grant of Rs4 billion for PIA.
This grant is in response to a fresh demand of nearly Rs23 billion to
cover interest payments on loans.
The ECC has now approved a
total of Rs22 billion in supplementary grants, primarily due to incorrect
budgeting by the finance ministry in June last year.
This bailout package marks
the second one granted by the ECC in the past two months. In April, the
government provided Rs15.6 billion to the struggling airline. Despite these
financial injections, PIA's losses have continued to rise, reaching Rs633 billion
by September 2022.
Back in December 2017, the
previous government assumed responsibility for PIA's interest costs over a
five-year period, with the expectation that the airline would become
financially viable. However, despite more than Rs100 billion injected from
taxpayers, PIA is still far from achieving a stable financial position.
In the past, PIA management
requested an extension of the interest-payment facility until the completion of
financial restructuring. However, given the airline's poor performance, it is
doubtful whether this goal can ever be attained.
For the current fiscal
year, the government allocated Rs15 billion in the budget for interest
payments. Nonetheless, PIA has requested an additional Rs23 billion. The ECC
approved Rs4 billion and instructed the airline to secure the remaining Rs19
billion from commercial banks.
PIA management has highlighted that the total debt servicing cost for this fiscal year is projected to increase to Rs38 billion due to rising interest rates.
Source: Express Tribune