Why is it in the news?
- The Prime Minister’s Office (PMO) wants the finance ministry to reassess the idea of issuing foreign currency overseas sovereign bonds.
More in the news
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Finance Minister had in her budget speech said that India would look to issue overseas foreign currency sovereign bonds.
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The idea, however, has been criticised by former heads of the Reserve Bank of India and economists as it could create long-term economic risks by exposing the government’s liabilities to currency fluctuations.
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Sovereign bonds(1) A sovereign bond is a specific debt instrument issued by the government.(2) They can be denominated in both foreign and domestic currency.(3) Just like other bonds, these also promise to pay the buyer a certain amount of interest for a stipulated number of years and repay the face value on maturity.(4) They also have a rating associated with them which essentially speaks of their credit worthiness.
Source
Indian Express