CBN Clears $831m in Trapped Funds for Foreign Airlines, Confirms IATA
The Central Bank of Nigeria (CBN) has successfully cleared $831 million of foreign airlines’ trapped funds over the past year, the International Air Transport Association (IATA) confirmed on Sunday. This significant development reduces the global total of trapped airline funds to approximately $1.8 billion.
At its peak in June 2023, Nigeria’s blocked funds reached $850 million, severely impacting airline operations and finances. As of April 2024, only $19 million remains outstanding, pending verification by the CBN through commercial banks.
Willie Walsh, Director-General of IATA, commended the Nigerian government for its efforts to resolve this issue. “At its peak in June 2023, Nigeria’s blocked funds amounted to $850 million, significantly affecting airline operations and finances in the country. Carriers faced difficulties in repatriating revenues in US dollars, and the high volume of blocked funds led some airlines to reduce their operations and one carrier to temporarily cease operations in Nigeria, which severely impacted the country’s aviation industry. However, as of April 2024, 98 per cent of these funds have been cleared. The remaining $19 million is due to the Central Bank’s ongoing verification of outstanding forward claims filed by the commercial banks,” Walsh stated.
He praised the new Nigerian government and the CBN for their efforts, emphasising the benefits for both individual Nigerians and the broader economy. “We are on the right path and urge the government to clear the residual $19 million and continue prioritising aviation,” he added.
IATA also reported a significant decrease in blocked airline funds globally, largely due to the clearance in Nigeria. Egypt has similarly approved the clearance of a substantial amount of its blocked funds. However, airlines in both countries have faced adverse effects from the devaluation of their currencies.
The situation remains severe in Pakistan and Bangladesh, where a combined total of $731 million in airline funds remains blocked. Pakistan is currently withholding $411 million, while Bangladesh is withholding $320 million.
“Pakistan and Bangladesh must release the $731 million in blocked funds immediately to ensure airlines can continue providing essential air connectivity,” IATA’s statement urged. “In Bangladesh, the solution is in the hands of the Central Bank, which must prioritise aviation’s access to foreign exchange in line with international treaty obligations. The solution in Pakistan is finding efficient alternatives to the system of audit and tax exemption certificates, which cause long processing delays.”
This development highlights the ongoing challenges and the efforts required to maintain vital air connectivity and support the global aviation industry.
