Not Out of the Woods Yet

ON the face of things, the government has reason to feel relieved that the external payments situation has remained comfortable even after the redemption of the India Development Bonds (IDBs) during January-February. Of the total amount of $ 2,104 mn due, apparently some $ 969 mn had been converted into rupees and the balance of $ 1,135 mn has been repaid in foreign exchange to the bond-holders. Even so, the country's foreign currency assets (including SDRs) have hardly been affected; they were about $ 19.7 bn a month ago on January 10 and now on February 15, after the final redemption of the IDBs, they stand at $ 19.6 bn. The current fiscal year thus bids fair to end with a reserve build-up of $ 2.6 to 3 bn despite debt service obligations of as much as $ 14.5 bn which included, apart from the IDBs, repayments to the IMF of a little less than $ 1 bn and withdrawals under the FCNRA scheme of around $ 3.5 bn. This is certainly much better than expected.