IATA has urged the governments of Pakistan and Bangladesh to release more than $720 million in blocked airline funds, while calling for simplified processes to repatriate the money.
Philip Goh, IATA’s regional vice-president for Asia-Pacific, says the timely repatriation of these funds “is critical for payment of dollar-denominated expenses such as lease agreements, spare parts, overflight fees, and fuel”.
Goh adds: “Delaying repatriation contravenes international obligations written into bilateral agreements and increases exchange rate risks for airlines.”
IATA has called on Pakistan to simplify its “onerous” repatriation process, which currently requires audit and tax exemption certificates. The requirements “cause unnecessary delays”, the industry association adds. Pakistan accounts for about $399 million in blocked funds.
As for Bangladesh, IATA says the country’s central bank must prioritise the aviation sector’s access to foreign exchange facilities. The country is holding $323 million in blocked funds, according to IATA.
“We recognise that governments have a difficult challenge in how foreign currencies are used strategically,” says Goh. ”Airlines operate on razor-thin margins. They need to prioritise the markets they serve based on the confidence they have in being able to pay their expenses with revenues that are remitted in a timely and efficient fashion.”
Demanding “urgent solutions”, Goh warns that reduced connectivity from airlines exiting both markets “limits the potential” for growth and investment.
So far, neither government has publicly commented on IATA’s statement.
IATA data from April 2023 shows some $2.27 billion in blocked funds globally, more than one-third of which is held in Nigeria.
