The Central Bank of Nigeria (CBN) has taken a significant step in addressing the country’s foreign exchange obligations by repaying $2 billion to clear a portion of its backlog to Deposit Money Banks (DMBs).
This payment, aimed at resolving pending obligations and stabilizing the forex market, comes amid concerns about the recent volatility leading to the depreciation of the naira against the US dollar.
According to reports, the CBN’s forward contract obligations to banks amounted to $7 billion, and the delay in settling these debts had contributed to the current challenges in the forex market. To ease the pressure on the exchange rate and fulfill its commitments, the CBN disbursed the funds to DMBs.
In addition to the repayment to banks, the CBN also allocated $61.64 million to foreign airlines as part of efforts to address the accumulated foreign exchange owed to them. The CBN’s debt to foreign airlines had reportedly exceeded $700 million, causing challenges for airlines operating in Nigeria.
Hakama Sidi Alia, the Acting Director of Corporate Communications at the CBN, emphasized the central bank’s commitment to resolving outstanding obligations and fostering a functional foreign exchange market. Alia stated, “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.”
Foreign airlines operating in Nigeria have faced difficulties repatriating their ticket sales in foreign exchange, leading to a substantial backlog of funds. Nigeria, according to the International Air Transport Association (IATA), holds the highest amount of blocked funds at $792 million. This situation prompted concerns that some foreign airlines might consider withdrawing from the Nigerian market if the debt issue remained unresolved.
Reacting to the latest developments, Susan Akporiaye, President of the National Association of Nigerian Travel Agencies, noted that the $61.64 million allocated to foreign airlines was part of the accumulated debts. Akporiaye highlighted that the government had committed to settling the old outstanding debt at the exchange rates prevailing during the sales period, indicating an effort to address the long-standing issue and stabilize the aviation sector.
