Banks seek 16.6% interest on PIA loan

Commercial banks have demanded a fixed annual interest rate of 16.6% for deferring recoveries of their Rs281 billion loans to Pakistan International Airlines for five years, a demand Finance Minister Dr Shamshad Akhtar has refused to accept. Akhtar has made a counterproposal to give around 10% interest on the Rs281 billion loans, based on the banks’ actual cost of borrowing, according to sources in the Ministry of Privatisation. They said that due to this disagreement, along with some other contentious points, the banks were reluctant to give no-objection certificates for transferring their debt into a new holding company. The company has to be carved out of PIA, which is not possible without reaching an agreement with all the creditors. The discussions seem to have reached a deadlock, which has halted progress on the PIA privatisation. Privatisation ministry sources said that a final push was now expected in the next couple of days, as Privatisation Minister Fawad Hasan Fawad has also returned from Davos over the weekend. Only 18 days are left in the extended tenure of the interim government, which is now trying to leave behind a mark by further pushing the PIA privatisation agenda.