ISLAMABAD: Pakistan’s Civil Aviation Authority (CAA) lost more than $2 million during a three-day airspace closure which was in place due to rising tensions with India, following a recent incident in Kashmir, officials said on Monday.
Islamabad closed its airspace on Wednesday last week after the Pakistan Air Force (PAF) shot down an Indian fighter jet for violating the country’s airspace before capturing one of its pilots.
The move impacted more than 400 flights, leaving nearly 25,000 travelers stranded in different countries. The situation also forced various international air carriers to reroute their flights, with officials suspending civil and commercial air traffic operations as a precautionary measure, too.
Pakistan resumed partial flight operations at four airports on Friday with the CAA spokesperson, Farah Hussain telling Arab News on Monday that airspace was expected to be reopened by Tuesday across the nation.
“We can’t reveal the exact amount of loss incurred to the CAA due to airspace closure because this is classified information,” she said when pressed to talk about the loss in income.
However, a retired Pakistan International Airlines (PIA) captain, Aamir Kamal, said the CAA “charges approximately $5,000 per hour from airlines using our airspace.”
“All flights from Europe to the Far East and back fly over Pakistan. They are charged by the amount of time they remain in our airspace,” Kamal, who served the airline for 38 years, told Arab News.
Due to the closure of airspace, thousands of Pakistani Hajj pilgrims and passengers were stranded in Saudi Arabia and the United Arab Emirates, among other Gulf Cooperation Council (GCC) countries.
“As per the directive of Prime Minister Imran Khan, we are bringing back passengers from Saudi Arabia and the UAE on a priority basis and this special flight operation may complete in the next couple of days,” Mashood Tajwar, PIA spokesperson, told Arab News.
He added that the administration had initiated a “swift action with a well thought-out strategy to normalize the flight operations as quickly as possible.”
To take care of stranded Pakistani pilgrims, Saudi Arabia’s Hajj Ministry had announced — just a day after the airspace closure — that “all Pakistani pilgrims stranded in Haramain Sharifain will be the guests of the Saudi Ministry for Hajj and Umrah till the resumption of flights.”
Meanwhile, the Saudi Hajj ministry said that all arrangements for Pakistani pilgrims were being made on the instructions of the Saudi Crown Prince Mohammed bin Salman and under the guidance of King Salman bin Abdulaziz, Custodian of the Two Holy Mosques.
Abid Hussain, a Pakistani pilgrim in Saudi Arabia who returned to Islamabad on Sunday morning, said that he was scheduled to fly from King Abdulaziz International Airport in Jeddah on Thursday for Islamabad, but his flight was canceled due to the closure of the airspace in Pakistan.
“Thousands of Pakistani pilgrims were stranded there, scrambling to rebook their flights as some of them were also short on funds,” he told Arab News. “But we are thankful to the Saudi government for facilitating us and treating us as their guests in a difficult time.”
Pakistan loses more than $2mn in three-day airspace closure
Pakistan loses more than $2mn in three-day airspace closure
- Move impacted over 400 flights and 25,000 passengers
- Pilgrims visiting Saudi for Hajj thank government for treating them as guests in “difficult time”
Islamabad dismisses claims about paying up to 8 percent interest on foreign loans as ‘misleading’
- Pakistan has long relied on external loans to help bridge persistent gaps in public finances and foreign exchange reserves
- Pakistan’s total external debt, liabilities stand at $138 billion at an overall average cost of around 4 percent, ministry says
KARACHI: Pakistan’s finance ministry on Sunday dismissed as “misleading” claims that the country is paying up to 8 percent interest on external loans, saying the overall average cost of external public debt is approximately 4 percent.
Pakistan has long relied on external loans to help bridge persistent gaps in public finances and foreign exchange reserves, driven largely by a narrow tax base, chronic trade deficits, rising debt-servicing costs and repeated balance-of-payments pressures.
Over the decades, successive governments have turned to multilateral and bilateral lenders, including the International Monetary Fund, the World Bank and the Asian Development Bank, to support budgetary needs and shore up foreign exchange reserves.
The finance ministry on Sunday issued a clarification in response to a “recent press commentary” regarding the country’s external debt position and associated interest payments, and said the figures required contextual explanation to ensure accurate understanding of Pakistan’s external debt profile.
“Pakistan’s total external debt and liabilities currently stand at $138 billion. This figure, however, encompasses a broad range of obligations, including public and publicly guaranteed debt, debt of Public Sector Enterprises (both guaranteed and non-guaranteed), bank borrowings, private-sector external debt, and intercompany liabilities to direct investors. It is therefore important to distinguish this aggregate figure from External Public (Government) Debt, which amounts to approximately $92 billion,” it said.
“Of the total External Public Debt, nearly 75 percent comprises concessional and long-term financing obtained from multilateral institutions (excluding the IMF) and bilateral development partners. Only about 7 percent of this debt consists of commercial loans, while another 7 percent relates to long-term Eurobonds. In light of this composition, the claim that Pakistan is paying interest on external loans ‘up to 8 percent’ is misleading.
The overall average cost of External Public Debt is approximately 4 percent, reflecting the predominantly concessional nature of the borrowing portfolio.”
With respect to interest payments, public external debt interest outflows increased from $1.99 billion in Fiscal Year (FY) 2022 to $3.59 billion in FY2025, representing an increase of 80.4 percent, not 84 percent as reported. In absolute terms, interest payments rose by $1.60 billion over this period, not $1.67 billion, it said.
According to the State Bank of Pakistan’s records, Pakistan’s total debt servicing payments to specific creditors during the period under reference were as follows: the IMF received $1.50 billion, of which $580 million constituted interest; Naya Pakistan Certificates payments totaled $1.56 billion, including $94 million in interest; the Asian Development Bank received $1.54 billion, including $615 million in interest; the World Bank received $1.25 billion, including $419 million in interest; and external commercial loans amounted to nearly $3 billion, of which $327 million represented interest payments.
“While interest payments have increased in absolute terms, this rise cannot be attributed solely to an expansion in the debt stock,” the ministry said. “Although the overall debt stock has increased slightly since FY2022, the additional inflows have primarily originated from concessional multilateral sources and the IMF’s Extended Fund Facility (EFF) under the ongoing IMF-supported program.”
Pakistan secured a $7 billion IMF bailout in Sept. 2024 as part of Prime Minister Shehbaz Sharif’s efforts to stabilize the South Asian economy that narrowly averted a default in 2023. The government has since been making efforts to boost trade and bring in foreign investment to consolidate recovery.
“It is also important to note that the increase in interest payments reflects prevailing global interest rate dynamics. In response to the inflation surge of 2021–22, the US Federal Reserve raised the federal funds rate from 0.75-1.00 percent in May 2022 to 5.25–5.50 percent by July 2023. Although rates have since moderated to around 3.75 percent, they remain significantly higher than 2022 levels,” the finance ministry said.
“The government remains committed to prudent debt management, transparency, and the continued strengthening of Pakistan’s macroeconomic stability,” it added.
