CBN releases $831 million in international airline trapped funds (IATA).
The Central Bank of Nigeria has released international airlines of stuck funds totaling $831 million since June of last year, according to the International Air Transport Association.
The development, according to the IATA, headquartered in Geneva, Switzerland, had increased the trapped money of international airlines to around $1.8 billion worldwide.
From the peak of about $850 million in foreign airline financing in Nigeria last June, IATA says that about $19 million is still owing.
International airline association reported that the remaining $19 million was pending commercial banks’ CBN verification.
Declaring this in a statement on Sunday was Willie Walsh, the Director-General of IATA.
The head of IATA, however, commended the Nigerian government for its initiatives to guarantee that foreign airlines successfully repatriate their earnings.
“At its height in June 2023, Nigeria’s blocked funds amounted to $850 million, much impacting airline operations and finances in the country,” he claimed.
The significant amount of blocked cash forced some airlines to cut back on operations and one carrier to temporarily stop operations in Nigeria, severely impacting the nation’s aviation sector. Carriers also had trouble repatriating revenues in US dollars. As of April 2024, nevertheless, 98 percent of these monies have been paid out.
The Central Bank is continuing to verify outstanding forward claims submitted by commercial banks, which accounts for the remaining $19 million.
The Central Bank of Nigeria and the new Nigerian government deserve praise for their attempts to find a solution to this problem. Reliable air connectivity will help Nigerians individually and the economy as well, as access to earnings is essential.
We are moving on the right direction and we implore the government to continue giving aviation first priority and clear the remaining $19 million.
As this was going on, IATA also declared a notable decline in the amount of airline revenues that countries were preventing from returning home.
Walsh added that a sizable amount of money that had been stopped in Nigeria had been cleared.
Egypt also gave its permission for the substantial amount of money it had been blocking to be cleared.
“However, in both cases, the devaluation of the Egyptian Pound and the Nigerian Naira adversely affected airlines,” IATA added.
The message went on to say that with Pakistan and Bangladesh continuing to block $731 million—Pakistan is currently withholding $411 million and Bangladesh $320 million—the situation was even worse.
“Pakistan and Bangladesh must release the $731 million in blocked funds immediately to ensure airlines may continue to provide essential air connectivity,” the statement said.
In Bangladesh, the Central Bank is the answer; it has to provide aviation’s access to foreign exchange top priority in accordance with international treaty requirements.
The answer in Pakistan is in identifying effective substitutes for the tax exemption certificate and audit systems, which result in protracted processing times.
Nigerian currency shortages has caused major airlines to restrict money into the nation. All the same, the new CBN administration has cleared the money.