Pakistan’s taxpayers are expected to carry a significant financial burden from the old debt of Pakistan International Airlines, with around Rs. 30 billion likely to be paid in interest during the current fiscal year.
Following the privatisation of PIA, the government transferred approximately Rs. 268.5 billion in legacy liabilities to a holding company. Although the airline has moved forward under new ownership, its previous financial obligations remain linked to the public sector.
The debt has been restructured at an annual interest rate of 12%, with the repayment period spread across 10 years. This arrangement means the government will continue making substantial interest payments over the coming years.
The estimated Rs. 30 billion interest cost is around three times the Rs. 10 billion in cash received by the government from the sale of a 75% stake in the airline. The difference highlights the financial challenge created by PIA’s accumulated liabilities.
PIA has faced years of financial difficulties, with its debt and losses becoming a major burden on public finances. The decision to privatise the airline was aimed at reducing the government’s direct financial involvement and improving its future performance.
However, the transfer of legacy debt means taxpayers will continue to feel the impact of the airline’s past financial problems even after the privatisation process.
The interest payments are expected to remain an important expense for the government as it manages the restructured liabilities. The situation also shows that privatisation does not immediately remove all financial obligations connected to a state-owned enterprise.
For Pakistan, managing PIA’s remaining debt will remain important as the government seeks to reduce pressure on public finances and control the cost of past liabilities.
