CBN Pays $2bn Forex Backlog to Deposit Banks

The Central Bank of Nigeria has paid $2bn to clear a part of its backlog of matured foreign exchange obligations to Deposit Money Banks.

CBN’s forward contract obligations to banks is placed at $7bn, according to reports.

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 is said to owe 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 resulting to 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.

Punch/Hauwa Abu