principles of public debt management

PUBLIC DEBT

Principles of Public Debt Management:

Principles as given by Professor Phillip E. Taylor:

• The policies pursued must be able to extract from the public without undue coercion.

• The extraction of loanable funds from the market and its repayment when debt is retired should not frustrate the smooth growth of the economy.

Other Principles of Public Debt Management • Principle of minimum interest cost of debt

servicing (theory of economization)

• Principle of optimum satisfaction to investors (investors should be happy while investing in public debt instruments)

• Principle of proper coordination (between fiscal policy and monetary policy)

• Principle of proper adjustment of maturity (proper matching and use of money market and capital market debt instruments)

• Principle of debt sustainability (borrow only to the required level and can be repaid within stipulated time)

• Principle of efficient use and effective output (to generate productivity and welfare)