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Govt trying to find Rs8bn loan guarantees for PIA

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1 year ago

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After flight cancellation, PIA is now announcing only those flights for which fuel has been procured.

  • PIA has 34 aircraft in fleet, out of which two are inoperative.
  • PIA’s revenue has declined to Rs300m.
  • Airline spox says 15 int’l flights, 7 domestic flights to depart today.

ISLAMABAD: As Pakistan International Airlines (PIA) suffers from 70% decline in revenue after the cancellation of over 600 flights, the Finance Minister has been scrambling to get Rs8 billion loan guarantees to remain within the International Monetary Fund’s (IMF) agreed limits, The News reported quoting sources.

According to the sources, the national carrier experienced a huge decline — around 60% to 70% — in its daily revenue. The airline generated around Rs700 million Rs800 million, which has now reduced to Rs300 million.

There are 34 aircraft in PIA’s fleet, out of which two planes are inoperative because of different reasons. Meanwhile, the airline also doesn’t have the finances to meet its fuel requirements. Following flight cancellation, the national air carrier is now announcing only those flights for which fuel has been procured, as it will ensure operation without any delay.

Last week, the ECC had approved a bridge financing of Rs8 billion through CAA resources that would be used for payment of $25 million liabilities owed to Malaysia for procurement of two aircraft. There was an outstanding amount of $30 million but after tough negotiations, PIA convinced them over payment of $25 million.

PIA had sought Rs24.6 billion for its operational expenses from the government of Pakistan. The Ministry of Finance had initially rejected the demand for this injection on the basis that in the past, PIA came up with financial injections with the commitment to undertake restructuring plan but it was never implemented.

The Privatisation Commission is making all-out efforts to accomplish all required procedures for going ahead with privatisation till December or January. It is yet to be seen how speedily they would be able to accomplish all the spadework and procedures without compromising the objective of transparency.

It would be an uphill task to accomplish the PIA transaction but also keep its operation intact. If it reaches to point of shutdown in its existing shape, its privatisation will not produce the desired results.

The Ministry of Finance has been working on creating a fiscal space and would provide its nod in the shape of guarantees for generating loans of Rs8 billion.

“We might be able to jack up all financial injections up to Rs15 billion but it’s too early to share precise numbers,” said one official, adding that the outcome of the ongoing exercise would be determined this week. The total guarantee limit for PIA stood at Rs262 billion, which was exhausted but later on the airline paid back its outstanding loans. So there was room available to the tune of Rs8 billion at the moment.

There is no easy solution for cash-bleeding PIA in sight but it should be privatised in a manner that it remains afloat for the next three to six months.

PIA to operate 22 flights today

Meanwhile, the PIA spokesperson said that the airline will operate 22 domestic and international flights today. However, 29 flights have also been cancelled today due to the overall situation.

Speaking with Geo News, the spokesperson said that 15 international flights and seven domestic flights will depart today.

“PIA’s flight operations are improving,” the spokesperson said.

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Dar chairs the CCOP meeting; Blue World’s bid offer of Rs.10 billion is rejected.

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2 days ago

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The Foreign Minister/Deputy Prime Minister chaired the Cabinet Committee on Privatization meeting.

Other committee members who attended the conference included the Federal Secretaries of several Divisions, the Ministers of Finance and Revenue, Industry and Food, Commerce, Power, and Privatization.

The CCOP took the PC Board’s recommendation into consideration and suggested that Blue World’s bid of 10 billion rupees for the sale of 60% of PIACL’s shares be rejected. The bid was rejected by the CCOP, who chose to follow the PC Board’s advice.

The government’s determination to sell out PIACL through government-to-government or privatization was reaffirmed by the CCOP.

The CCOP was pleased with the Aviation Division’s evaluation of PIACL’s sound financial standing.

Additionally, the CCOP established a committee, chaired by the Minister of State for Finance, to assess potential transaction possibilities for the privatization of the Roosevelt Hotel and the appropriate modes of adoption in light of existing legal rules.

Prior to its subsequent meeting, the CCOP also ordered that all difficulties be resolved and an agreement for the selling of services to an international hotel be concluded.

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The KSE-100 Index has surged by 790 points, resulting in an all-time peak for the stock exchange.

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2 days ago

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The benchmark KSE-100 Index increased by 790 points, marking a new all-time high for the Pakistan Stock Exchange (PSX) at 94,982 points.

The record-breaking performance underscores a surge of optimism and investor confidence in the stock market.

As investors responded to favorable economic signals, the market experienced a significant increase of over 500 points in early trading. Later, the KSE-100 Index reached another record level of 94,786 points after adding 594 points to its upward trajectory.

This positive development comes as the State Bank of Pakistan’s (SBP) foreign exchange reserves saw an increase of $84 million, reaching $11.26 billion during the week ending November 8, according to data released by the central bank on Thursday.

This represents an increase of 0.75% from the previous week. In addition, the nation’s total liquid foreign reserves experienced a modest increase, increasing by $33.7 million or 0.21% week-on-week to $15.97 billion.

In contrast, commercial banks’ reserves experienced a decline of $50.3 million or 1.06%, ultimately settling at $4.71 billion.

Furthermore, the economic team of Pakistan has expressed confidence in the discussions with the International Monetary Fund (IMF). Minister of State for Finance Ali Pervaiz Malik, in an exclusive conversation with Samaa TV, claimed talks were moving in a positive direction.

Highlighting improvements in Pakistan’s economic conditions, Malik noted substantial progress over the past six months to a year. He emphasized that Pakistan’s current economic situation has seen significant enhancement, with a reduced current account deficit of only $100 million in the first quarter, a reflection of the government’s strategy to increase remittances and boost exports.

Malik shared that discussions with the IMF are primarily focused on external financing, and while there have been speculations about a potential mini-budget or an increase in the petroleum levy, he clarified that these are currently premature considerations.

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Positive IMF negotiations propel KSE-100 Index above 94,000 points

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3 days ago

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As a result of investors’ optimism about the reported progress in the continuing talks with the International Monetary Fund (IMF), the Pakistan Stock Exchange (PSX) experienced a robust surge.

The benchmark KSE-100 Index of the PSX, which tracks market sentiment, rose 713 points to a new record high of 94,068 points, breaking above the 94,000-point barrier, as the trading session began.

Early in the day, the stock market began its upward trajectory as the KSE-100 Index steadily rose, gaining 574 points to reach 93,932 points. A possible agreement with the International Monetary Fund (IMF) might lead to more fiscal stability and back Pakistan’s economic reforms, which is why investors are so optimistic about the country’s future.

Officials from the Federal Board of Revenue (FBR) informed the International Monetary Fund (IMF) on Wednesday that the government would not be introducing a mini-budget and would instead continue to aim to collect Rs12,970 billion in taxes each year.

In line with continuing discussions with the Fund, FBR sources revealed that petroleum goods will not be subject to the General Sales Tax (GST).

The fact that Pakistan’s tax-to-GDP ratio has increased from 8.8% to 10.3%, a 1.5% gain viewed as a favorable sign of Pakistan’s fiscal policies, has reportedly pleased the IMF, who has voiced satisfaction at Pakistan’s recent economic performance.

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