The finance ministry has directed the cash-strapped national flag carrier, the Pakistan International Airlines (PIA), to prepare three alternative business plans to pull it out of the present financial constraints, official sources told Business Recorder.
The Economic Coordination Committee (ECC) of the Cabinet, which met with Prime Minister Yousuf Raza Gilani in the chair on last Tuesday, had allowed the finance ministry to issue the Government of Pakistan (GoP) guarantee for additional borrowing of Rs 1 billion as short-term arrangements, as PIA was unable to clear some of its critical payments.
The defence ministry has requested the finance division to provide support to PIA as it was facing serious financial constraints. Subsequently, Prime Minister Gilani chaired a meeting on March 29 when PIA officials made a presentation on its operational difficulties. The prime minister directed that financial problems of the PIAC might be closely examined in a joint meeting of the finance and defence ministers with PIA officials and some arrangements should be made to meet their immediate cash shortfall.
Sources said that in pursuance of the prime minister''s directives, a meeting was held on April 2 which was attended by both the finance and defence ministers, finance and defence secretaries as well as other officers concerned to review financial position of the national flag carrier. During discussion, the sources said the defence secretary informed that PIA has suffered an operational loss of Rs 13.4 billion in the current fiscal year and is not in a position to make some critical payments for oil supplies, employees contributing, fund and technical vendors.
The finance ministry was of the view that further government support has to be based on a well-defined programme that would credibly take PIA out of the clutches of government guaranteed borrowings, which can no longer be supported as unbearable burden has already been imposed on country''s fiscal position.
Therefore, the ministry had supported the proposal to allow PIA a short-term borrowing of Rs 1 billion to meet immediate requirements for which the Government of Pakistan would provide guarantee.
Meanwhile, PIA has been directed to prepare three alternative business plans/sustained recovery plans to get itself out of the present financial constraints and become a profit-earning entity not dependent on government support.
Comments
Comments are closed.