The International Monetary Fund (IMF) has approved key measures, including sales tax exemptions and the elimination of equity losses, to facilitate the privatization of Pakistan International Airlines (PIA), according to sources.

As part of the agreement, the buyer of PIA will receive sales tax exemptions for purchasing or leasing aircraft for both domestic and international routes. These measures are expected to significantly enhance the airline’s bidding value, which could rise from Rs. 250 billion to Rs. 350 billion, sources revealed.

The government has assumed responsibility for Rs. 660 billion of PIA’s debt, which has been transferred to a holding company. The funds generated from the privatization of PIA and the sale of the Roosevelt Hotel in New York will be used to settle these liabilities. Additionally, the IMF has approved the settlement of the holding company’s debt, paving the way for a smoother privatization process.

A joint venture is expected to be formed within six months to oversee the sale of the Roosevelt Hotel, with an estimated value of $1 billion, sources disclosed. The proceeds from the sale will also contribute to addressing PIA’s financial obligations.

Initially, the IMF had approved sales tax exemptions only for the purchase or lease of aircraft for international routes. However, following a renewed request, the exemption has now been extended to include domestic routes as well. This move will provide PIA’s leased aircraft with a monthly sales tax relief of approximately Rs. 8.1 million, reducing operational costs and making the airline more attractive to potential buyers.

Prime Minister has been briefed on the latest developments, including the tax exemptions, the elimination of losses, and the joint venture plan for the Roosevelt Hotel. These measures are expected to streamline the privatization process and attract competitive bids for PIA.