The Central Bank of Nigeria has paid $2 billion to discharge some of its maturing foreign exchange obligations to Deposit Money Banks.
According to reports, the CBN’s forward contract commitments to banks total $7 billion. The delay in debt payment has been blamed for the current instability in the forex market, which has resulted in the naira decreasing in value versus 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.
According to reports, CBN owes foreign airlines more than $700 million.
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.”