CBN Disburses $61.64m to Foreign Airlines

The Central Bank of Nigeria (CBN) yesterday announced that it had disbursed about $61.64 million to foreign airlines through various Deposit Money Banks (DMBs) in the country.

CBN added that it had redeemed outstanding forward liabilities amounting to about $2 billion in the past three months, taking the total to about $2.062 billion.

The FX intervention was confirmed in a statement issued by CBN’s acting Director, Corporate Communications Department, Mrs. Hakama Sidi.

The central bank said the payment reaffirmed its commitment to eliminating the backlog of pending matured foreign exchange in banks as well as dousing pressure on the exchange rate.

Sidi explained that the initiative was part of the apex bank’s efforts to decrease its outstanding liability to the airlines.

She said, “This underscores the CBN’s commitment to the resolution of pending obligations and a functional foreign exchange market.”

According to her, the payments consolidate CBN’s ongoing efforts to settle all remaining valid forward transactions, with the aim of alleviating the current pressure on the country’s exchange rate.

By the latest intervention, the central bank hopes to provide a considerable boost to the naira against other major world currencies as well as increase investors’ confidence in the economy.

The federal government recently received $2.25 billion out of the $3.3 billion foreign exchange (FX) facility from the African Export–Import Bank (Afreximbank).

The long-awaited credit support seeks to ameliorate the acute FX shortage in the country, which had constrained economic activities and doused investors’ confidence.

Earlier in December, President Bola Tinubu had assured Nigerians of his administration’s commitment to resolve the FX backlogs through injection of funds into the market.

It is estimated that there is between $7 billion and $10 billion in existing FX backlogs, which must be cleared, to boost investors’ confidence, some of whom have already exited the country due to the persistent liquidity constraints bedevilling the economy.

Afreximbank, acting as the mandated lead arranger, along with United Bank for Africa (UBA) as local arranger, had closed on a $3.3 billion liquidity support for Nigeria through a structured financing arrangement with the Nigerian National Petroleum Company (NNPC).

The transaction, which released $2.25 billion as the first tranche into the nation’s coffers, was expected to ease the FX illiquidity in the country, while the balance was expected to come in this month. UBA is also acting as the onshore depository bank for the transaction.

Other participants in the deal include Gunvor, Sahara Energy, and other major oil traders that are to join the parties.

The transaction, which is in line with Tinubu’s Renewed Hope Agenda, seeks to stabilise the FX market and ease inflationary trends that have beleaguered the Nigerian economy since the administration took over.