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 a foreign media agency.
“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