$700million airlines’ funds with commercial banks, FG clears backlogs

•  IATA welcomes govt’s action

The International Air Transport Association (IATA) said it welcomed the Central Bank of Nigeria’s (CBN) announcement of the release of an additional $64.44 million in blocked airline funds.

IATA in a statement made available to Aviation Metric said it was consulting with its airline members to verify the release of their revenues.

It noted that while it was encouraging, it stated that it is crucial to recognize that approximately $700 million remains blocked with Nigeria’s commercial banks, stressing that there’s a considerable journey ahead in fully addressing the issue.

Media consultant to IATA, Linden Birns the trapped funds imbroglio is exacerbated by the devaluation of the Nigerian Naira, which he noted has dropped significantly against the US Dollar, adding that airlines should not be unfairly penalized by the lower exchange rate.

“We will continue to monitor the situation closely and work with the government to ensure that the environment remains conducive to ensuring Nigeria’s connectivity to international markets.”

Amid the free fall of the Naira, the Central Bank of Nigeria, CBN, says it has concluded the payment of all verified forex backlog owed foreign airlines with the release of an additional $64.44 million.

Hakama Sidi-Ali, CBN’s acting director of corporate communications, disclosed this on Tuesday.

Sidi-Ali said the latest amount paid to the airlines brought the total verified sum disbursed to the sector to $136.73 million.

Recall that the apex bank released $500 million to clear the Forex backlog.

The development comes barely a week after the banker’s bank injected approximately $2 billion to settle outstanding commitments across the manufacturing, aviation, and petroleum sectors.

In December last year, IATA threatened to quit flights to Nigeria over the $793 million trapped fund.

Meanwhile, despite the forex release, the country’s currency had continued to experience a free fall against the US dollar, reaching a historic low of N1,348.63 at the official market and N1,450 at the parallel market.

Sidi-Ali stated that the latest payment to the airlines pushed the total verified sum disbursed to the sector to $136.73 million, emphasising that all verified airline claims have now been resolved.

According to him, CBN Governor Olayemi Cardoso and his team are dedicated to clearing the verified backlog of payments across all sectors and restoring confidence in the Nigerian FX market.

She added that the apex bank was working with partners to increase liquidity in the FX market and lower pressure on the country’s currency.

While expressing confidence that the market will respond positively to the current infusion of more than $64 million, she cautioned FX market participants to avoid speculating, which might harm the naira.

Nigeria topped the list of 27 countries with $2 billion trapped airlines’ funds globally in December 2022.

Nigeria had $793 million, Pakistan had $225 million, Bangladesh had $208 million, Lebanon had $144 million, and Algeria had $140 million, according to IATA.

Wole Shadare