The Central Bank of Nigeria has paid $2bn to clear a part of its backlog of matured foreign exchange obligations to the Deposit Money Banks.
Reports have put CBN’s forward contract obligations to banks at $7bn. The delay in the payment of the debt has been said to be responsible for the current volatility in the forex market, a situation that has led to the falling value of the naira against the US dollar.
According to a statement by the CBN on Sunday, foreign airlines also received $61.64m from the disbursement, aimed to address the pending matured foreign exchange owed to them.
CBN reportedly owes foreign airlines over $700m.
A statement by the CBN Acting Director of Corporate Communications, Hakama Sidi Alia, said the move underscored its commitment to resolving pending obligations and a functional foreign exchange market.
She said, “These payments signify the CBN’s ongoing efforts to settle all remaining valid forward transactions, to alleviate the current pressure on the country’s exchange rate.
“It is anticipated that this initiative by the CBN should provide a considerable boost to the Naira hug against other major world currencies and further increase investor confidence in the Nigeria economy.”
Foreign airlines in Nigeria have grappled with the challenge of repatriating their ticket sales in foreign exchange.
The situation has resulted in a substantial backlog, reaching billions of dollars.
According to the International Air Transport Association, Nigeria tops the list with blocked funds totaling $792mn, followed by Egypt ($348m), Algeria ($199m), AFI zone ($183m), and Ethiopia ($128m).
IATA had warned the CBN that some foreign airlines might be forced to quit the Nigerian market if nothing was done to clear the debt.
Reacting to the latest development on Sunday, the President of the National Association of Nigerian Travel Agencies, Susan Akporiaye, said the $61.64m paid to foreign airlines was part of the accumulated debts.
Akporiaye explained, “The old debts are being settled at the prevailing rate when tickets are sold, with the exchange rate around N400/450 to one dollar. The debt, which was originally over $800m, has been reduced.
“This specific issue led to Emirates discontinuing flights into Nigeria. The government has committed to paying the old outstanding debt at the rates prevalent during the sales period.”
According to her, foreign airlines have been sourcing forex at the I&E window over the development.
