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BusinessPakistan

Pakistan begins process for outsourcing airport operations

March 30, 2023

Pakistan, which is struggling with low foreign currency reserves needed for imports, proposed outsourcing operations at three major international airports as a way to attract foreign investors.

https://p.dw.com/p/4PVb9
A Pakistan International Airlines aircraft, and ground staff, at the Islamabad Airport, 2018
Pakistan hopes outsourcing operations at major aiports will spur friendly countries to open their walletsImage: Ahmad Kamal/Xinhua/picture alliance

Pakistan has initiated a process to outsource operations at Karachi, Islamabad, and Lahore airports, the Finance Ministry announced in a statement on Thursday.

The country's three major international airports are located in those cities.

Pakistani Prime Minister Shahbaz Sharif made the decision in a meeting in December to do so, with the hope of attracting foreign direct investment to the country and providing better facilities for passengers. However the decision might well also be linked to Pakistan's precarious financial situation, with only roughly enough for a typical month's worth of imports left in its foreign exchange reserves.

Pakistan's foreign exchange reserves have fallen to below $3 billion (roughly €2.7 billion), forcing the country to further tighten control on imports of raw materials for the industrial sector. As a result, factories were forced to close in recent weeks and people have been laid off.

Pakistanis struggle to fuel everyday life

Pakistan's general elections are due this August, though former Prime Minister Imran Khan has been rallying for early elections to pull the country out of multiple crises.

Pakistan in talks with Qatar to run joint terminals

Islamabad has engaged the World Bank's International Finance Corporation (IFC) as an advisor for the outsourcing process.

It has been in talks with Qatar for a partnership to jointly run terminals at Islamabad, Karachi and Lahore.

Though details of the partnership or any agreement is yet to be made official, Islamabad has been negotiating the deal with Doha for several months.

Pakistan's economic woes

Pakistan, with a population of 231 million, is facing an acute balance-of-payments crisis, running down its foreign exchange reserves.

Islamabad is seeking a crucial installment of $1.1 billion (€1 billion) from the International Monetary Fund (IMF) — part of its $6 billion bailout package — to avoid default. But the assistance package has been put on hold since December 2022.

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Faced with the shortage of US dollars, pressure has been growing on Shahbaz Sharif's government to secure the emergency package from the International Monetary Fund.

The instability in the country stems from a combination of things, including rising food and fuel costs, political upheaval, the deadly floods last year, the war in Ukraine, as well as more frequent militant attacks, including from the Pakistani Taliban, which abandoned a ceasefire with the government last November.

rm/msh (Reuters, AP)