KARACHI: The government will not buy aircraft for privatized Pakistan International Airlines (PIA) and has announced no sovereign guarantee or taxpayer-funded loan for their purchase, a finance ministry adviser said on Sunday, clarifying Islamabad’s role in facilitating potential US financing for the airline.

Finance Minister Muhammad Aurangzeb met US Export-Import Bank Chair John Jovanovich in New York on Sept. 24 and sought financing support for PIA aircraft and engines. The talks also covered potential financing for refinery upgrades and the Reko Diq copper and gold mining project in southwestern Balochistan.

Adviser to the finance minister Khurram Schehzad said the government’s role was to help businesses access international financing and suppliers rather than assume their commercial risks.

“The Government is neither buying aircraft for a privatised PIA nor has it announced any sovereign guarantee or taxpayer-funded loan for doing so,” Schehzad said in a post on X.

His comments followed public discussion over the government’s role in facilitating potential financing for PIA after its privatization, and whether such support could leave taxpayers exposed to the airline’s commercial risks.

PIA has expressed interest in Boeing aircraft, particularly 787 Dreamliners, and Aurangzeb sought US EXIM support for a financing package during last week’s meeting. The two sides also discussed possible financing for aircraft pre-delivery payments.

Schehzad said US EXIM, like other export credit agencies, supports exports from its home country, meaning it can provide financing support to foreign buyers of US-made Boeing aircraft.

He said the agency’s framework allows for asset-backed aircraft financing, under which financing can be secured against the aircraft itself and credit assessed on the airline or lessee and any guarantor involved.

“A sovereign guarantee is therefore not an automatic requirement,” he added.

Pakistan has been pursuing a broader shift toward private-sector-led growth, including the privatization of loss-making state-owned enterprises, as it seeks to reduce the government’s role in commercial activity and attract private investment.

“Private-sector-led growth does not mean Government abandons the private sector; it means Government enables it rather than running businesses itself,” Schehzad said.

He rejected suggestions that the US EXIM discussions amounted to a public loan, hidden subsidy or state backstop for PIA, saying no such arrangement had been announced.

“The official statement refers to potential US EXIM financing support; it does not announce Government borrowing for PIA or a sovereign guarantee,” Schehzad said.

“Privatization transfers ownership and commercial management,” he added. “It does not require the Government of Pakistan to stop opening doors for Pakistani companies.”

https://www.arabnews.pk/pakistan/pakistan-says-government-will-not-fund-aircraft-purchases-for-privatized-pia-3002505