The government and commercial banks have agreed on a debt restructuring plan for Pakistan International Airlines (PIA) totaling Rs. 268 billion.
The Ministry of Finance has reversed its earlier stance of not including PIA debt in public debt and is now committed to funding principal and interest payments from the budget, reported Express Tribune.
According to the agreement, the government will use PIA sale earnings for principal payments, relying on the budget if funds are insufficient. Banks, in exchange, agree to a 10-year debt rollover at a 12 percent annual interest rate, totaling Rs. 32.2 billion in annual interest payments.
This arrangement means that banks would get Rs. 322 billion in interest payments over a decade, which exceeds their outstanding stocks of Rs. 268 billion. The entire payout to banks at a 12 percent interest rate will be Rs. 572 billion over ten years.
The Ministry of Finance will seek the endorsement of the International Monetary Fund, while the banks will seek approval from their boards of directors.
Per the agreement between the finance ministry, the privatization ministry, and nine commercial banks, the Rs. 268 billion debt, including the Rs. 250 billion principal amount, will be restructured for 10 years. The government will pay 12 percent interest charges which will be made every year. The principal payments will be made using funds from the privatization and the sale of other fixed assets. If no proceeds are available, payments will be made via the federal budget.
It bears mentioning that authorities hoped to privatize PIA before the caretaker government packed its bags and went home. With elections next week and the PIA sale nowhere near completion, that appears highly unlikely.
So, first you let the sinners sin. Then you let them go and now you pay for their sins. Excellent!
I am extremely happy on reading this all, happy because I was wondering how could a single day pass without such a piece of weird news.
In no civilised country in the world such white elephants are fed from the public money. PIA is known for free rides (as is WAPDA). If the government wants to continue to pamper such black sheep, it should do so from its own pockets, not the public money. It appears that the present setup’s motive is to squeeze every single drop of blood out of the common man before it leaves the office and it has already succeeded in this task.
What is Government’s own pocket. It’s all public money….every single penny
Pakistan taraqi ki Rah par
That’s absurd, commercial entity losses be paid from taxpayers money? Why? Have you ever heard that government is paying a shopkeeper for his losses?
what a joke.. people have to pay for incompetency.
Please sell PIA
Funding PIA is like “Flogging a dead horse”.
Just shut it down until it’s privatized.
PIA is like a leech, sucking economy dry.
Spot on correct….
This is just a beginning next is pakistan steek mills then is railway and then alot more….
Cut 50% of grade 17 and above salaries of the department if its in loss. And increase the punishment as the grade increases.
If the losses are still not covered, seize thier pensions then their assets..
Instead of finding solutions.all they can think about is taxing.imf expected 3.0 GDP but later revised it to 2.5 and now its 2.0.petroluem sales dropped 30%.electricity usage reduced by 33%.automobile and electronics sales plunged to historic low.multinational companies and industries are leaving pakistan.street crimes quadrupled,inflation on sky.whats left to tax?those who know how to evade taxes are getting more benefits while poor people are suffering.the day of judgement will be harsh for these rulers.inshallah.
What nonsense?!? Why is taxpayer being burdened with this white elephant? It has been Army and Army’s governments (puppets and/or frontmen like Nawaz and Zardari) and armed forces personnel (Air Marshals) leading it to losses so let Army fund it from their own budget and forego their corruption filled procurements and salaries/pensions/benefits.
Government has been funding PIA losses from their own kitty/budget. This is no new burden to public. The entire PIA debt is secured by GOP guarantee which in any case was to be paid through budget since PIA does not has the capacity to repay.
PIA is a sarkari free taxi service, every sarkar taking full advantages from it. Sarkar will not privatise it. Awam ka kam hay sarkar ki naukar hi rahe aur Privatise ki demand na karay. Agr krti hay tu karay koi farq nhe parta.
Every project or development regardless of its size and scale, always turned cash negative or loss and burden to economy.
Every department is overstaffed, out of control and enemy of that department.
Is there any hope?
Of course Of course. What else are we good for? We are born to be slaves and feed our master’s mistakes. Company sarkar ki mistakes ko kon fund kare ga.. Hum he hain na
In the long run it will still be good for the people and country…. because PIA died a long time ago and was kept upright to please a very few, at the recurring expense of the people.
This is a country where rich people loot become richer and go abroad while poor people become poorer and have to stuck in the country to pay for their loot.