International Air Transport Association (IATA) has urged Bangladesh to pay $320 million funds blocked by the government for 40 months.
At the same time, Pakistan was also asked to clear its dues of $411 million which has also been held for 40 months.
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Globally, blocked funds have decreased by 28% to $1.8 billion since December 2023. This improvement is largely due to significant clearances in Nigeria and Egypt. However, airlines in both countries faced losses due to currency devaluations, according to a media release on Sunday.
The situation is particularly concerning in Bangladesh and Pakistan, IATA said, where airlines are unable to access a combined $731 million in revenue. IATA Director General Willie Walsh urged both countries to prioritize the release of these funds to ensure continued air connectivity, said the release.
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“Pakistan and Bangladesh must release the $731 million in blocked funds immediately,” said Walsh. “In Bangladesh, the solution is in the hands of the Central Bank, which must prioritize aviation’s access to foreign exchange in line with international treaty obligations. The solution in Pakistan is finding efficient alternatives to the system of audit and tax exemption certificates, which cause long processing delays,” he added.
Nigeria's success story provides a blueprint for resolving this issue. With government intervention, 98% of the previously blocked funds have been cleared, significantly improving the situation for airlines operating in the country.
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Eight countries are responsible for the lion's share of the remaining blocked funds, with a combined total of $1.6 billion representing 87% of the issue. Pakistan tops the list, followed closely by Bangladesh. Other significant contributors include Algeria ($286 million), XAF zone countries ($151 million), Ethiopia ($149 million), Lebanon ($129 million), Eritrea ($75 million), and Zimbabwe ($69 million). These figures highlight the specific challenges faced by airlines operating in these regions.