Government and banks disagree at PIA debt restructuring
The restructuring of Pakistan International Airlines' (PIA) Rs260
billion debt has hit a deadlock as the government and commercial banks remain
at an impasse. Finance Minister Dr Shamshad Akhtar has reportedly rejected
three proposals from banks, which were perceived as converting the debt without
any significant adjustments. The proposed options included converting the debt into
Pakistan Investment Bonds (PIB), providing zero-coupon security papers, or
placing the funds in a new holding company.
A technical committee, established by the finance minister on
October 23, chaired by Secretary Privatisation Commission Usman Bajwa, has been
unable to secure a new Rs15 billion loan for PIA or restructure the existing
debt within its set objectives. The Ministry of Finance, dissatisfied with the
proposed options, has extended the committee's deadline by two weeks without
altering its terms of reference.
Government
approves Rs20 billion loan for PIA from banks
Qamar Abbasi, the Finance Ministry spokesperson, stated that the
Technical Committee is still in deliberation, considering various proposals,
with no final recommendations made yet. The 12-member committee, comprised of
representatives from the government and commercial banks, was initially
expected to present the debt restructuring plan by November 8th.
No breakthrough has been achieved in the second crucial task of
the committee – securing Rs15 billion in new commercial loans for PIA. Banks
have been hesitant to extend new loans until resolution of the existing debt
issue. PIA had requested a moratorium on its Rs260 billion domestic debt
repayments in September to address an annual deficit of Rs153 billion.
Government
rejects PIA's Rs23 billion bailout request
Meanwhile, the government's privatization plan for PIA is
progressing slowly. The privatisation ministry, having hired a financial
advisor consortium led by Ernst & Young, aims to sell core assets,
including basic engineering services and routes. However, the timeline for
completing this process, initially set for the end of January, appears
ambitious.
The global routes of PIA are considered valuable assets in the
privatization plan, although the overall process faces challenges and delays.
Source: Express Tribune