The State Bank of Pakistan (SBP) has prevented the repatriation of airline funds totaling $225 million.
If the central bank continues to deny payments to international airline businesses, there is a considerable chance that Pakistan will be banned by the International Air Transport Association (IATA), the global liaison for guaranteeing airline standards and sustainability.
People who spoke on the condition of anonymity stated that the central bank has restricted outward remittances to an amount that may exceed $0.25 billion in order to prevent foreign currency outflows as the nation fights to escape its current financial crisis.
This is the second prominent payment issue after SBP halted $34 million in direct carrier billing (DCB) payments to multinational service providers including Google, Amazon, and Meta last month. In response to the government’s failure to lift the blockade, Google halted carrier-paid apps in Pakistan.
IATA has cautioned in an official statement that the amount of airline funds blocked by countries for repatriation has increased by more than 25 percent, or $394 million, in the last six months. The total amount of frozen funds is currently close to $2 billion. IATA has urged governments to remove any barriers preventing airlines from repatriating their profits from ticket sales and other activities, in accordance with international commitments and agreements.
Aside from this, the IATA is also repeating its calls for Venezuela to release the $3.8 billion of airline money that have been banned from repatriation since 2016, when the Venezuelan government issued its last authorization for limited repatriation of assets.
“Preventing airlines from repatriating funds may seem like an easy method to replenish depleted coffers, but the local economy will ultimately pay a steep price. Airlines are no exception to the rule that if they cannot receive payment, they cannot continue to offer their services. Air connections are a significant economic stimulant. Facilitating the effective repatriation of income is essential for any economy to maintain global connectivity to markets and supply chains, according to Willie Walsh, IATA’s general director.
Repatriation of airline funds is prohibited in over 27 countries and territories. Nigeria (551 million dollars), Pakistan (225 million dollars), Bangladesh (208 million dollars), Lebanon (144 million dollars), and Algeria (140 million dollars) are the top five markets with blocked funds, excluding Venezuela.