PIA selling obstacles will soon be removed

The two main barriers to PIA's privatization have been removed with the approval of the International Monetary Fund (IMF), which waives the 18% sales tax on aircraft leases for induction into PIA and for depositing additional liabilities in a holding company.The development might assist restart the fourth-largest loss-making organization in Pakistan's privatization process. During a briefing on the PIA sell-off on Tuesday, Deputy Prime Minister Ishaq Dar learned that the two largest obstacles would soon be lifted, according to sources.After the government rejected their proposals to eliminate the sales tax and pay the remaining Rs45 billion in obligations to convert the negative equity to positive, the serious PIA bidders earlier withdrew.

The PIA privatization process might soon be resurrected with the IMF's approval. In order to persuade the IMF to permit the tax exemption and the addition of additional liabilities in a holding company, the Finance Ministry and the Privatization Commission engaged in talks with the organization. The government split the business into two firms earlier this year and transferred Rs623 billion in liabilities from the primary PIA to a holding company.The PIA bidders requested last month that the government remove the 18% sales tax on new or leased aircraft and write off an additional Rs45 billion in liabilities, according to Privatization Secretary Usman Bajwa. The Federal Board of Revenue was responsible for around Rs26 billion in liabilities, the Civil Aviation Authority provided bridge financing of Rs10 billion, and other liabilities amounted to Rs9 billion. The Privatization Commission informed the IMF that the privatization had failed due to the two requirements, and it asked the IMF to grant it permission to write off Rs45 billion in liabilities and exclude the sales tax.