FG Clears $831m Of Trapped Airline Funds – IATA—-The International Air Transport Association (IATA) has confirmed that the Central Bank of Nigeria (CBN) has successfully cleared $831 million of foreign airlines’ trapped funds from June last year to date.

This significant development has reduced the global total of such trapped funds to approximately $1.8 billion.

At its peak in June 2023, Nigeria had $850 million in blocked funds, causing substantial operational and financial difficulties for international airlines. This situation led some carriers to reduce their operations, with one airline even temporarily ceasing services in Nigeria. The blocking of funds had severe repercussions on the country’s aviation industry.

IATA Director-General Willie Walsh highlighted the current state of affairs, noting that only $19 million remains outstanding, awaiting CBN’s verification through commercial banks. He praised the Nigerian government and the CBN for their efforts in resolving the issue, emphasizing the positive impact on Nigeria’s economy and the importance of maintaining reliable air connectivity.

Walsh stated, “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 commended the new Nigerian government and the CBN for their efforts to resolve this issue, stressing the broader economic benefits of reliable air connectivity. “We are on the right path and urge the government to clear the residual $19 million and continue prioritizing aviation,” he added.

Globally, IATA has also reported a significant decrease in the amount of airline funds blocked from repatriation by governments, largely due to Nigeria’s clearance. Egypt has similarly approved the release of its accumulated blocked funds. However, airlines in both countries have been adversely affected by the devaluation of their local currencies, the Egyptian Pound and the Nigerian Naira.

The situation remains critical in Pakistan and Bangladesh, where $731 million in airline funds are still blocked. Pakistan is withholding $411 million, and Bangladesh is withholding $320 million. IATA has urged these governments to release the funds immediately to ensure continued essential air connectivity. In Bangladesh, the Central Bank must prioritize aviation’s access to foreign exchange, while in Pakistan, a more efficient system for audit and tax exemption certificates is needed to reduce processing delays.

This development is a crucial step towards stabilizing and improving the global aviation industry’s financial health, ensuring that airlines can continue to operate smoothly and provide vital connectivity worldwide.