The International Monetary Fund (IMF) has approved a waiver of the 18% sales tax on leased aircraft for Pakistan International Airlines (PIA), a move expected to clear significant hurdles in the privatization process of the struggling national flag carrier.

According to a report by The Express Tribune, the decision is seen as a major step toward facilitating the sale of PIA, which has been mired in financial difficulties. The privatization process faced uncertainty after a real estate developer submitted a bid of just Rs. 10 billion for a 60% stake in October 2024, far below expectations.

Deputy Prime Minister Ishaq Dar was recently briefed on the development, with government officials confirming that the IMF’s approval would exempt prospective investors from paying the sales tax on new aircraft. This exemption addresses a key demand from bidders, who had also called for the government to write off Rs. 45 billion in liabilities to make the deal more attractive.

PIA’s restructuring plan, which involves transferring Rs. 623 billion in liabilities to a holding company, is now expected to move forward without further delays. The finance ministry had earlier highlighted the challenges posed by the sales tax at the international level and stressed the importance of attracting foreign investment to revive the airline.

The IMF’s decision is a significant boost for PIA’s privatization efforts, which are critical to turning around the loss-making airline. With the sales tax hurdle removed, the government hopes to attract serious investors and expedite the process of restructuring and privatization.