Public debt

1. DEBT MANAGEMENT
Debt management refers to policy formation that seeks to achieve
certain objectives and the implementation of such a policy.
“Public debt management is concerned with the decisions of forms pub.
debt, in terms of which new bonds are sold, maturing debts are
redeemed or refunded, the proportion in which different forms of
public debt should be issued, the pattern of pub. debt and its ownership
etc.” Prof.Abbot.

2. Need for pub.debt management
The increase or decrease of public debt has its effect on the
working of any economy.
The policy of public debt plays an important role in the
formation of economic policy of a country.
The economic devpt. of a nation may foster or hamper due to
changes that occur due to the utilization of pub.debt.
It is necessary to know the conditions which are essential for the
implementation of planning policies.
It gives the knowledge of the actual amount of requirements for
the implementation of a certain policy.

3. OBJECTIVES
Pub.debt management must subserve the economic policy of the
govt.During inflation,it should limit the purchasing power and effective
dd and vice-versa in deflation.
In times of war or any other emergencies, it should provide sufficient
funds to meet the requirement of the economy.
It should be implemented in such a way that it must be beneficial for the
activities of the govt.
It should not have any adverse effect on the economic condition of the
country.
It should strengthen the money market.

4. PRCIPLES OF DEBT MANAGEMENT
According to Prof.Philip E. Taylor, the general principles are
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 it is convenient to do so.
It should be so placed as to minimize the need to enter the market
when it is inconvenient to do so.

5. These principles are elaborated under the following:-
Minimum interest cost of servicing public debt.
The structure of interest rates on securities of different maturities
should be such that it should put less burden on the economy. The cost
of servicing pub. debt should be minimum.
2.Satisfaction of the investors
Without fulfilling the aspirations of the investors the govt. may find
difficulty in issuing securities.So govt. must offer attractive terms and
conditions so that investors may invest their money in such securities.

6. 3 Converting the short term debt into long term debt without
disturbing the long term stability of the economy.
4.Pub. debt must be in coordination with fiscal and monetary policies.
It should lead to maintaining economic stability and economic growth.
5. Proper adjustment of maturity with a view to bring high degree of
liquidity in the market. The holders of pub.debt should not be advised to
monetize their debt obligations before maturity.