Government Rules Out Sovereign Guarantee For New PIA Aircraft

The federal government has said it is not purchasing aircraft for Pakistan International Airlines and has not approved taxpayer-backed sovereign guarantees for any new fleet financing. The clarification was issued after online claims suggested that public funds or state guarantees were being arranged for the airline.

Khurram Schehzad, adviser to the finance minister, said PIA is now privately owned following its privatisation through an auction in December last year. He said no government borrowing, hidden subsidy or public assumption of the airline's commercial risk had been announced.

The issue emerged after Finance Minister Muhammad Aurangzeb met John Jovanovich, chairman of the US Export-Import Bank, during the United Nations General Assembly session in New York. The meeting included discussion of financing opportunities for aircraft and engines, alongside other areas of Pakistan-US economic engagement.

Officials said PIA had expressed interest in Boeing 787 Dreamliners and that support for a potential financing package had been discussed. They stressed, however, that a discussion with an export-credit institution does not amount to a commitment by the Pakistani government to finance aircraft purchases.

Schehzad explained that export-credit agencies typically support their own countries' exports and employment. Their financing structures can be based on the aircraft as collateral and on an assessment of the airline, lessee or another guarantor, meaning a sovereign guarantee is not automatically required.

The government described its role as facilitating access to international financing, technology, suppliers and investment opportunities for Pakistani businesses. It said this approach is consistent with a policy of reducing direct state involvement in commercial enterprises while encouraging private-sector-led growth.

The discussions with the US institution were not limited to aviation. They also covered potential financing in areas including refinery upgrades and the Reko Diq mining project, according to the clarification.

The statement seeks to draw a clear distinction between government facilitation and public financial liability. Any aircraft acquisition by PIA would require its own commercial financing arrangements, with the government maintaining that no sovereign-backed deal has been announced.