Wings Sold, Weight Kept: Pakistan’s PIA Privatisation Finalised, But Treasury Gets Just A Sliver | Exclusive

In a significant move that has sparked intense debate over the transparency of state asset sales, the Pakistani government has finalised the privatisation of Pakistan International Airlines (PIA) for PKR 135 billion. While Islamabad has repeatedly justified the sale as an unavoidable “structural benchmark” mandated by the International Monetary Fund (IMF), critics and sources close to the deal told CNN-News18 that the IMF pressure served as a convenient shield for a transaction that offers remarkably little to the national exchequer.

The Treasury’s Tiny Slice

The headline figure of PKR 135 billion for a 75% stake masks a startling reality: over 90% of this amount will never reach the government’s treasury. According to the deal’s rules, 92.5% of the sale proceeds are

to be reinvested directly into the airline for modernisation and operational improvements, leaving only 7.5% (roughly PKR 10 billion) for the federal exchequer. Critics argue that while the IMF demands fiscal discipline and loss reduction, it never explicitly required national assets to be offloaded under such lopsided terms.

Debt Shift and Intentional Sequencing

Perhaps the most contentious aspect of the sale is the treatment of PIA’s staggering legacy debt. Before the auction, the government shifted approximately PKR 654 billion in liabilities from the airline’s books onto the public balance sheet. This “corporate rearrangement”, which effectively socialised the airline’s decades of losses, was completed months before the alleged “IMF urgency” peaked. To many observers, this sequence suggests an intentional strategy to hand over a “clean” balance sheet to private investors while leaving ordinary Pakistanis to bear the burden through increased taxation and inflation.

Restricted Competition and Valuation Concerns

The auction, which was broadcast live on December 23, attracted only three bidders—all of them domestic players. Major international carriers and Gulf-based airlines, who have historically expressed interest in Pakistan’s strategic routes, were notably absent from the final bidding pool. Sources suggest that the process lacked the meaningful international participation required for a true valuation recovery. This is particularly striking given that the European Union recently lifted its four-year ban on PIA, restoring access to high-yield, lucrative routes that should have theoretically boosted the carrier’s market value.

A Future Borne by the Public

While the winning consortium, led by Arif Habib Corporation, has committed to an additional investment of PKR 80 billion over five years, the immediate financial relief for the state appears marginal. The privatisation may stop the annual PKR 35 billion drain on the budget, but the hundreds of billions in shifted debt remain a permanent fixture on the public ledger. As Islamabad moves toward further privatisations in the energy and finance sectors, the PIA deal stands as a polarising precedent—heralded by the Prime Minister as a “historic milestone” but viewed by critics as a rushed fire sale conducted under the pretext of international pressure.