CBN approves intervention funds for airlines
The Central Bank of Nigeria (CBN) has approved a Special Secondary Market Intervention Retail Sales (SMIS) for airlines operating in the country. This one-off exercise is dedicated to enable airlines clear off the backlog of matured Foreign Exchange obligations. To also benefit from the intervention are raw materials and machineries for manufacturing companies and agricultural chemicals.
A statement signed by the Deputy Director Press, Ministry of Aviation James Odaudu, said the resolution by the apex bank to intervene in the Inter-Bank Forex market through forward settlement is expected to engender market confidence, ensure access to Forex by the airlines to settle their obligations and sustain the integrity of the Nigerian Inter-Bank Foreign Exchange market.
The statement said the essence of the exercise is that the CBN will not apply the relevant provisions under clause 2.4.3 (i) of its Revised Guidelines for the Operation of the Nigerian Inter-Bank Foreign Exchange Market, which provides that “all SMIS bids shall be submitted to the CBN through the FXPDs”. Consequently, CBN shall receive bids from all the Authorized Dealers, adding that CBN would also not apply the relevant provisions under clause 2.4.3 (i) of the Guidelines, which provide that “Spot Forex sold to any particular end-user shall not exceed 1% of the overall available funds on offer at each SMIS session”.
According to the CBN, whereas the bids are on Spot Forex basis as the Authorized Dealers’ accounts with the CBN will be debited in full for the Naira equivalent of the USD bid amount, the CBN will settle the bids through forward settlements of 2 months. Customers that are not willing to accept the settlement terms have been advised not to participate in this Special SMIS – Retail.
Reacting to the development, Minister of State for Aviation Hadi Sirika described the CBN intervention as a great relief for airline operators in the country who have complained bitterly over their inability to access the required Foreign Exchange to settle their backlog of obligations and which has adversely affected their operations.