Aurangzeb says delay due to ensuring macroeconomic stability and doing proper due diligence of interested parties
By our correspondent
ISLAMABAD: Pakistan is set to move forward with the long-delayed privatisation of its national carrier, Pakistan International Airlines (PIA), and the outsourcing of Islamabad’s international airport, according to Finance Minister Muhammad Aurangzeb. Speaking to the media on Wednesday, Aurangzeb outlined the government’s ambitions to conclude these initiatives by November 2024.
Aurangzeb, who took office earlier this year, had previously expressed hope that PIA’s privatisation could be completed by June 2024. However, he acknowledged a five-month delay attributed to two key factors: the need for macroeconomic stability and thorough due diligence of prospective investors. “When any foreign or local investor is looking to invest a substantial amount, they want to ensure that the foundation is solid,” he remarked, highlighting the importance of macroeconomic conditions.
The finance minister elaborated that the scrutiny of potential bidders for both PIA and Islamabad airport has contributed to the postponement. “Ultimately, it’s the cabinet that approved the extension in timelines, allowing investors to conduct their due diligence before submitting proposals,” he noted.
Aurangzeb also pointed out that upon the current government’s assumption of office, Pakistan faced arrears in profit and dividend repayments. However, efforts have been made to rectify these issues, particularly following strides towards macroeconomic stability. The country narrowly avoided default last year amid political turmoil and economic strife exacerbated by catastrophic flooding and long-standing mismanagement. While inflation had peaked at a staggering 38 percent, it has since fallen to below 7 percent, aided by the central bank’s high-interest rates and other measures aimed at preserving foreign exchange reserves, including import bans.
In a positive development, the International Monetary Fund (IMF) recently approved a $7 billion loan—marking Pakistan’s 24th financial support package since 1958. Aurangzeb lauded improvements in the country’s current account deficit and the stabilisation of the Pakistani rupee, which has depreciated approximately 65 percent against the US dollar since 2020. “In May and June, benefiting from this macroeconomic stability, we paid more than $2 billion to our existing international investors,” he reported.
As per the IMF, Pakistan’s gross public debt now stands at 69 percent of GDP, approximately $258 billion. The current IMF agreement hinges on the privatisation of state-owned enterprises (SOEs), broadening the tax base, and reforming the power sector. Aurangzeb identified a common thread among these critical issues: “Tax, power, SOEs—there’s leakage, there’s theft, there’s corruption. We must address all of that,” he stated.
