Algeria, a country of stunning natural beauty, has long been a popular destination for travelers worldwide. But behind this idyllic facade lies a problem that worries the airline industry: the massive blocking of funds from foreign airlines. With nearly $200 million blocked, Algeria ranks third in the world in terms of blocked amounts, according to the International Air Transport Association (IATA).
The Burden of Foreign Airlines
IATA regularly sounds the alarm on the critical situation of foreign airline funds blocked by governments around the world. Its December 2022 report found that Algeria was among the five countries in the world holding the highest amounts of blocked currencies. Nigeria and Algeria held $551 million and $140 million respectively at the end of 2022.
According to IATA, the situation is only getting worse. In 2023, the amount of funds that foreign airlines had to repatriate from abroad saw an alarming increase. In June 2023, IATA reported that blocked funds increased by 47% to $2.27 billion in April 2023, up from $1.55 billion in April 2022.
Algeria, A Major Player in the Blocked Funds Crisis
Unfortunately, Algeria finds itself on the list of bad payers when it comes to repatriating funds from foreign airlines. With an amount of $196.3 million blocked, the country ranks third, behind Bangladesh and Nigeria, according to IATA figures. The issue of repatriation of funds by airlines operating in Algeria has become a major challenge.
Restrictions on Capital Repatriation
The main reason for these massive blockages lies in the restrictions on capital repatriation imposed by certain African states. Faced with a crisis in foreign exchange reserves, these countries have temporarily banned the outflow of foreign currencies. Algeria, Nigeria, and Egypt are among the states guilty of this practice, continuing to block funds from foreign airlines that serve their skies.
IATA revealed that the total amount of airline funds stranded in Africa reached US$1.9 billion by the end of 2023. Nigeria leads with US$790 million, followed by Egypt with 348 million dollars, and Algeria with 199 million dollars. The FCFA zone and Ethiopia complete the list of the five main culprits, according to IATA data cited by the site L’Algerie Today.
The alarming situation of stranded funds of foreign airlines in Algeria reflects the financial challenges facing international air carriers. Although Algeria may have legitimate reasons to protect its foreign exchange reserves, maintaining such high amounts of airline funds blocks access to essential liquidity and harms the country’s reputation as a destination, of travel. Resolving this issue is crucial for the future of the air transport sector in Algeria and the well-being of travelers around the world.
