The government is slated to include its maiden international sovereign borrowing in the Union budget for 1997-98 to ensure transparency and parliamentary approval for the entire transaction. It is considering a flotation of around $200-300 million for a tenure of 100 years.
Disclosing this, official sources said that an in-principle decision had been taken to go ahead with a sovereign borrowing.
However, with the modalites still being worked out, it is not clear whether this would also pave the way for the participation of foreign institutional investors in the government securities market. This would be subject to the governments perception of the countrys balance of payments.
The sovereign borrowing when effected will alleviate the pressure on domestic interest rates on account of the governments borrowing programme. This is because a part of the annual borrowing