Even if the government decides to go ahead
and issue sovereign bonds in foreign currency,
its rising borrowings will continue to put
pressure on liquidity in the domestic market.
By ANILESH S. MAHAJAN
ILLUSTRATION BY RAJ VERMAn July 20, Argentina moved towards an
effective default after failing to reach an
agreement with vulture funds demanding
full payment of their $1.3 billion dues. This is
its second brush with a sovereign debt crisis
since 2001/02 when it too had been engulfed
by what was then called the Latin American
contagion, a direct result of huge foreign
currency borrowings that the countries in
the region had made in order to finance their
deficits and huge infrastructure projects in
last few decades of the 20th century.
A fear of a repeat might be playing on the
minds of economists watching Finance
Minister Nirmala Sitharaman’sSOVEREIGN
DILEMMA
August 25I 2019 I BUSINESS TODAYI 41