High loan interest pushes Nepal Airlines Corporation into crisis; interest rates under review

The government is consulting on reviewing interest rates on loans taken for the management of Nepal Airlines Corporation. Minister for Culture, Tourism and Civil Aviation Khadga Raj Poudel shared this information.

He was speaking at Monday's meeting of the House of Representatives' International Relations and Tourism Committee. The corporation has borrowed from the Employees Provident Fund and the Citizen Investment Trust. Discussions are under way with the prime minister and finance minister to make interest and installment payments on these loans practical, Poudel said.

He said the loans from these two large institutions cannot be called unmanageable. He also noted that both institutions hold savings of the general public and employees.

Corporation officials said the Provident Fund loan carries interest of about 9.25 percent. Interest of about 10.5 percent is charged on the Citizen Investment Trust loan.

About Rs 137.5 million is still due from the government for the head of state's foreign visits, Covid-era rescue operations and various rescue flights.

A cheaper loan offer has come from a private bank, but it cannot be taken until the Provident Fund loan is repaid.

At the same committee meeting, Acting General Manager Janakraj Kalakheti also gave his view. He said Nepal Airlines will not collapse from patchwork fixes and that institutional restructuring is needed. He acknowledged that implementation of the reports of past commissions and task forces has been disappointing.