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A theory is appropriate as long as it fits into the fact; when a theory doesn't fit in the fact, it's wise to walk with the fact.

Monday, April 9, 2012

Time for Sovereign Bond?

It seems that the government decided to sell sovereign bond of the amount US$500 million, for the first time of such in the history of the country, in the international stock market, even at a higher interest rate.

1. The government (in other words, balance of payment) is suffering for the acute shortage of foreign currency reserves;
2. It seems that the government is not getting the loan (US$ 1 billion) from the IMF soon as it expected earlier.

Here is the link on the news.

Comment: One common economic fact that our economists should know: interest rate is not a matter of concern when there is excess demand for money. This is a classic example.

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