Airlines to get dollar bailout from CBN
Airline operators in Nigeria can now heave a sigh of relief, especially, if the current move by the Minister of State (Aviation), Hadi Sirika in convincing the Central Bank of Nigeria (CBN) to include them in the inter-bank foreign exchange market pulls through as planned.
Sirika, on Friday, assured the airline operators, under the aegis of Airlines Operators of Nigeria (AON) that with the level of discussion on the matter with the CBN governor, Godwin Emefiele, that any moment from third week of October 14, 2016, the difficulty that they were experiencing in sourcing dollars for their operations would be a thing of the past.
However, a circular from CBN on its acceptance to bail out what it described as some critical sectors of the economy said: “In order to further engender market confidence, ensure access to FX by end users and sustain the integrity of the Nigerian Inter-bank FX market, the Central Bank of Nigeria (CBN) has resolved to intervene in the Inter-bank FX market through forward settlement.”
The exercise is to clear backlog of the sectors concerned as CBN stated that,“This is an important one-off exercise dedicated to the clearance of the backlog of matured FX obligations for: Raw materials and machinery for manufacturing companies; Agricultural chemicals; and Airlines.
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“Due to the peculiarity of this exercise 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 (hereinafter referred to as the Guidelines), which provides that“all SMIS bids shall be submitted to the CBN through the FXPDs”
The apex bank also said it will still receive bids from all the authorized dealers in foreign currency before the targeted sector will receive any allocation.
But a source said the real sector, through the Manufacturing Association of Nigeria (MAN) had expressed dismay that the initial $600 million to be made available through the official rate monthly to its members was yet to be actualized.
Experts have since said that the idea of bailing out a sector through the interbank foreign exchange market can never be a solution to the scarcity of foreign currency that is hampering the recovery of the Nigerian economy from recession.
They argue that the approach if allowed to gain ground could be subjected to favouritism and other forms of abuse.
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