Govt earmarks Rs30 billion to pay interest on PIA’s Rs268 billion legacy debt: report

According to Profit, citing The Express Tribune, the federal government has set aside Rs30 billion this fiscal year to service interest on Rs268.5 billion of legacy debt belonging to Pakistan International Airlines (PIA). That sum sits inside a wider Rs73 billion contingency provision for privatisation costs. Ahead of the sale, the debt was moved to PIA Holding Company, leaving taxpayers with the interest costs.

The annual interest outlay of Rs30 billion is triple the Rs10 billion the government collected in cash from selling a 75% stake in PIA. The winning bidder agreed to pay Rs135 billion for that stake, but only Rs10 billion arrived in cash while the rest is being reinvested in the airline. A further 25% holding goes to the same buyer under a Rs45 billion cash payment.

In 2024, the holding company's board approved moving the airline's Rs268 billion commercial debt into public debt, with banks extending it over 10 years at 12%. Payments to the banks could climb to Rs573 billion, of which over Rs300 billion would be interest. According to a Finance Ministry official, the Rs30 billion is being provided as a loan to the holding company, which has no independent revenue and expects to repay it from hotel sales. The Privatisation Commission said the Rs73 billion allocation had nothing to do with it.