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Govt to prepay more external debt

New Delhi, July 25: Finance minister Jaswant Singh today said the government will continue to prepay offshore debt driven by higher foreign exchange reserves and lower domestic interest rates. The government, for the first time, during the third quarter of the financial year ended March 2003 had prepaid $ 2.8 billion worth of external debt ahead of schedule.

The government repaid prematurely two ADB and IDRD loans worth $ 125.4 crore and $ 154.9 crore respectively financed through domestic government borrowings, taking advantage of low domestic interest rates — which means swapping fixed rate foreign currency debt with fixed rate rupee debt.

“Our commitment to repay high interest-bearing debt earlier than schedule remains. Despite the repayment that was advanced, not a flutter was felt in the flow of foreign exchange or total reserves or the rupee rate,” Singh told Parliament.

Singh, however, did not give details on the amount or the timing of the payment of the foreign debt ahead of schedule.

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