Bangladesh asks 7 banks to pay dues to airlines after IATA remarks

Bangladesh owes global airlines $214.1 million in blocked funds, according to the International Air Transport Association

The central bank has ordered seven Bangladeshi banks to pay off $177.7 million owed to different airlines, saying they are ‘capable’ of clearing the dues.

The dues should be less than what was reported in the media, Abul Bashar, acting spokesperson for the Bangladesh Bank, said on Tuesday.

“We’ve paid off $402.1 million to the airlines since January. The seven banks owe the airlines $177.7 million and they’ve been asked to quickly pay off the debt.”

Bangladesh owes global airlines $214.1 million in blocked funds, the second biggest amount after Nigeria’s among the top five countries, according to the International Air Transport Association. The top five countries account for 68 percent of blocked funds.

The IATA in a statement on Jun 4 warned that rapidly rising levels of blocked funds were a threat to airline connectivity in the affected markets. The industry’s blocked funds have increased by 47 percent to $2.27 billion in April 2023 from $1.55 billion in April 2022.

“Airlines cannot continue to offer services in markets where they are unable to repatriate the revenues arising from their commercial activities in those markets,” said Willie Walsh, IATA’s director general.

“Governments need to work with industry to resolve this situation so airlines can continue to provide the connectivity that is vital to driving economic activity and job creation.”

The association urged governments to abide by international agreements and treaty obligations to enable airlines to repatriate these funds arising from the sale of tickets, cargo space, and other activities.

Bashar, the executive director of the central bank, said: “We’ve seen that these seven banks are capable of paying with dollars. Some banks might make their payments by tomorrow.”

“We’ve asked them to swiftly release the funds as it involves the dignity of the country,” he added.

Bashar also mentioned that IATA and Bangladesh Bank have ‘mismatching’ data on the amount of dues.

“It may well be that the airlines have yet to submit the necessary documents against the dues, leading to the difference in the information on the sum between IATA and Bangladesh Bank.”