ISLAMABAD: The International Monetary Fund (IMF) is encouraged that Pakistan will convert cash-strapped Pakistan International Airlines (PIA) into a limited company but said on Wednesday it will see if the reforms go far enough in restructuring the company.
Parliament adopted a law on Monday to convert PIA into a limited company but it prevents the government from giving up its management control.
Prime Minister Nawaz Sharif had made the privatisation of the company a top goal when he came to power in 2013.
The privatisation of it and 67 other state-owned companies is also a major element of a $6.7 billion IMF package that helped Pakistan stave off default in 2013. The IMF has continued to release loan instalments despite missed targets.
“We are encouraged that a consensus has been reached on corporatization of PIA,” Harald Finger, IMF mission chief for Pakistan, told Reuters in an email.
“We will need to study the approved bill and discuss with the authorities their emerging plans to run PIA strictly as a commercial entity and strengthen its performance in the absence of a transfer of management control to a private investor.” PIA has accumulated losses of more than $3 billion.
It and other loss-making companies, including power distribution companies and steel giant Pakistan Steel Mills, cost the government an estimated $5 billion a year.
In February, the IMF released the last $497 million tranche of its loan, even after Pakistan shelved plans to privatise its power supply companies and said it would miss deadlines to sell other loss-making state firms.
Another $1.1 billion remains to be released