The government has clarified that it is not purchasing aircraft for Pakistan International Airlines (PIA) following the airline’s privatisation and has not provided a taxpayer-funded loan or sovereign guarantee for a new fleet.
Adviser to the Finance Minister Khurram Schehzad issued the clarification after discussions surrounding official talks in New York raised questions about possible government support for PIA aircraft financing.
What Prompted The Government Clarification
On September 25, Finance Minister Muhammad Aurangzeb met John Jovanovich, chair of the US Export-Import Bank, on the sidelines of the United Nations General Assembly.
The discussions included possible financing for aircraft that PIA could purchase. Schehzad said some of the subsequent reaction had conflated the privatisation of the airline with the normal role of an export credit agency.
He clarified that the government is neither purchasing aircraft for PIA after privatisation nor has it announced a government guarantee or loan funded by taxpayers for that purpose.
How US Exim Bank Aircraft Financing Works
The US Export-Import Bank, commonly known as US Exim Bank, supports US exports and American jobs. Boeing aircraft qualify as US exports, allowing the bank to provide financing to eligible foreign buyers, including airlines, under its established rules.
Such financing can involve asset-backed structures in which the aircraft itself serves as security for the transaction.
The bank can also assess the creditworthiness of the airline, lessee or any guarantor involved in the financing arrangement.
No Sovereign Guarantee Announced
According to Schehzad, a sovereign guarantee is not a requirement for such financing.
He said no government guarantee has been announced for potential PIA aircraft purchases, nor has the government announced any borrowing for the airline’s fleet expansion.
The clarification was intended to distinguish commercial financing arrangements available to airlines from direct government financing or borrowing.
Government Role Remains Focused On Commercial Access
Schehzad said the government’s role is to help Pakistani companies access international financing, technology and suppliers while creating commercial opportunities.
The New York meeting was also broader than potential PIA aircraft financing.
Discussions covered possible financing for the wider aviation sector, refinery expansion and the Reko Diq project.
Government Rejects Taxpayer-Funded PIA Fleet Support
Schehzad rejected suggestions that the discussions represented a hidden subsidy, new public debt or an arrangement that would transfer PIA’s commercial aircraft risk to taxpayers.
He said none of these arrangements had been announced.
The distinction is significant because aircraft purchases can involve substantial financing requirements, while the government has stated that the commercial risk associated with PIA’s future fleet decisions does not automatically fall on the public budget.
What PIA Privatisation Means For Aircraft Purchases
PIA was sold through an auction in December last year, with the transaction intended to transfer ownership, commercial management and day-to-day operations to the private sector.
Under the post-privatisation structure, decisions concerning the airline’s fleet and related commercial financing are to be handled by its new ownership and management.
The government can continue supporting Pakistani businesses in accessing international markets, financing, technology and suppliers without directly assuming the commercial risks associated with private-sector investment decisions.