IATA urges Bangladesh to release $320m in airline funds

The International Air Transport Association (IATA) has called on the Government of Bangladesh to release $320 million in airline revenues that are being held in violation of international agreements.

According to a press release issued by IATA on Sunday, these funds are critical for maintaining essential air connectivity. The air transport association also pointed out that Pakistan owes $411 million. 

The release stated that the situation is particularly severe in Pakistan and Bangladesh, where airlines are unable to repatriate $731 million - $411 million in Pakistan and $320 million in Bangladesh - of revenues earned in these markets. 

"Pakistan and Bangladesh must release the $731 million in blocked funds immediately to ensure airlines can continue providing essential air connectivity," said Willie Walsh, IATA's director general.

"In Bangladesh, the solution is in the hands of the central bank, which must prioritise 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.

After the Russia-Ukraine conflict began in February 2022, Bangladesh experienced a significant decrease in its foreign exchange reserves. The reserves dropped from over $40 billion to below $20 billion due to soaring commodity prices, encompassing food, energy, and fertiliser. Moreover, the Bangladeshi taka depreciated by approximately 40%, sliding from Tk86 per dollar to Tk117 in the aftermath of the war.

The delays in funds repatriation in Bangladesh are mainly due to a shortage of US dollars.

Before COVID-19, Bangladesh's aviation sector supported around 125,000 jobs and $728 million in economic activity. Passenger numbers recovered to pre-COVID levels in 2023, and are expected to grow by more than 2 times by 2040.