The Vanuatu government has signed a guarantee agreement with the Vanuatu National Provident Fund (VNPF) concerning the resumption of repayments of a VUV1 billion vatu (USD8.2 million) loan for Air Vanuatu (NF, Port Vila) from the country's social security system. The agreement was signed on October 24.

In a statement, the VNPF said the government would arrange an initial payment of VUV250 million (USD2 million) toward the VUV1 billion principal, in addition to VUV121 million (USD1 million) in accrued interest and penalties.

The agreement also reaffirms the government's commitment to settle the remaining VUV871 million (USD7.1 million) within 90 days.

According to the VNPF's 2014 annual report, Air Vanuatu initially borrowed VUV340 million (USD2.8 million) in 2009, followed by an additional VUV660 million (USD5.4 million) in 2013. Both loans carried a 10-year repayment term at an interest rate of 6.75%.

The VNPF said in its 2023 annual report that Air Vanuatu had not made any repayments on the government-guaranteed loan “in recent years.”