Cash-Strapped Pakistan Leases Out New York Hotel; Aims To Generate USD 220 Million

The leasing of the Roosevelt Hotel is part of the Pakistan government's larger plans of resuscitating the country's febrile economy.

LAHORE: Pakistan has leased out its iconic Roosevelt Hotel in New York to the New York City Administration for three years, the cash-strapped government has announced, in a deal that will enable the country to earn up to USD 220 million. The Roosevelt Hotel, named after former US President Theodore Roosevelt, has been a prominent landmark in Manhattan, New York since 1924.

State-run Pakistan International Airlines (PIA) leased this prime property in 1979 and eventually purchased it two decades later. Under the contract, the New York City administration will operate for three years, providing residential facilities to migrants. "The lease agreement is expected to generate revenues to the tune of around USD 220 million for the Pakistan government," Minister of Railways and Aviation Khawaja Saad Rafique announced during a press conference here on Monday.

"A contract was signed for 1,250 rooms. The hotel will be returned to the government of Pakistan once the three-year term lease expires," he was quoted as saying by Geo TV. The hotel was shut during the pandemic in 2020, only to be reopened earlier this year to house migrants. The minister said the annual expenditures of the hotel were USD 25 million, with existing liabilities amounting to USD 20 million.

The leasing of the Roosevelt Hotel is part of the Pakistan government's larger plans of resuscitating the country's febrile economy. Cash-strapped Pakistan and the IMF have failed to reach a staff-level agreement on the much-needed USD 1.1 billion bailout package aimed at preventing the country from going bankrupt.

The funds are part of a USD 6.5 billion bailout package the IMF approved in 2019, which analysts say is critical if Pakistan is to avoid defaulting on external debt obligations. Pakistan, currently in the throes of a major economic crisis, is grappling with high external debt, a weak local currency and dwindling foreign exchange reserves enough to shore up for barely one month's imports.

Pakistan's inflation level rose by a whopping 36.4 per cent in the year in April, driven mainly by food prices. This is the highest in South Asia, and up from 35.4 per cent in March, according to the country's statistics bureau.