Govt initiates review of government guarantees | Daily Current Affairs 2021

Govt initiates review of government guarantees

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The Finance Ministry has asked all departments to undertake a review of government guarantees given by respective ministries to their CPSEs or entities. The review should undertake aspects like the discharge of repayment obligations or interest obligations as per terms of the loan agreement and covenants and conditions met, the Finance Ministry said in an office memorandum.

Besides, the details of CPSEs or entities due guarantee fee paid on time to the government should also be submitted. The Finance Ministry has extended date for submission of these details to April 30 from April 10. Guarantees are contingent liabilities have the potential to impact the financial performance of the government. In another circular, the ministry said FRBM Rules stipulates that government cannot guarantee more than 0.5 per cent of the GDP of the respective financial year to CPSE/entities.

All ministries and departments are requested that prioritised guarantee requirement for 2019-20 may be worked out to include only such proposals where the loan agreement can be signed and guarantee agreement can be executed during the year.

The guarantees already approved by the Budget Division of Department of Economic Affairs, Finance Ministry but not executed till March 31, 2019, needs to be revalidated and such proposals may also be included on the total guarantee requirement of 2019-20.

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