Pre-SFEM import: N2.6b tied down

About N2.6673 billion was paid by importers into the commercial banks that are still awaiting foreign exchange cover from the Central Bank.
A large portion of the money, had been paid into the banks since 1983.
The Republic gathered that N1.4285 billion is already paid to the Central Bank, while the balance of N1.2388 billion which represents the advanced deposit paid by importers against letters of credit is with the commercial banks.
Financial sources, said the backlog was caused by foreign exchange, which hit the country. Accordingly, CBN cannot provide foreign exchange to facilitate the transfer of the money to overseas creditors before the introduction of Second Tier Foreign Exchange Market (SFEM).
The hike in exchange rates put the importers who had already settled their bills in difficult position as they were being asked by their bankers to pay the new rates.
The importers, however, insisted that it was not proper for the banks to ask them to pay the prevalent exchange rates.
According to most importers, they paid in the N2.6673 billion into banks when the exchange rate was about N1.00 to $1.00.
But with the recent Central Bank guideline in which the settlement rate has been fixed at the rate ruling as at September 26, 1986, at that rate of about N1 to $1.5, importers were asked to pay the difference which according to financial experts amount to N1.332 billion naira.
Because government realise that the delay in remitting the money was as a result of its inability to provide the foreign exchange to effect remittance, it agreed to absorb the subsidy implied in the differential between the naira amount lodged with the Central Bank based on the settlement rate prevailing as at September 26 and the SFEM rate prevailing as at the time of release of foreign exchange repayment of rescheduled letters of credit and redemption of promissary notes.
In addition, government will be responsible for interest charges from the date of the lodgement with the Central Bank of the naira equivalent for each pre-SFEM transaction to the date of final repayment of the rescheduled letters of credit and the redemption of the promissory note.