US brings back a bond it last issued in 1986 to decrease fiscal deficit

WION Web Team
New Delhi, India Updated: Jan 20, 2020, 02:58 PM(IST)

Representative Image Photograph:( Reuters )

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The US treasury will evaluate the feedback of this bond and will meanwhile consider whether to issue 50-year and 100-year bonds or not.

To reduce its fiscal deficit, the US government bringing back a bond it had last issued in 1986.

After contemplating its options, the US treasury decided that it will issue a new 20-year bond within the first six months of 2020.

The US treasury will evaluate the feedback of this bond and will meanwhile consider whether to issue 50-year and 100-year bonds or not.

''Our goal is to finance the government with the least possible burden on the taxpayers. For this purpose, we are assessing our potential options,'' said  Steven Mnuchin, Treasury Secretary.

Also read: US industrial output fell 1% in December last year compared to 2018: Federal Reserve

What is fiscal deficit?

It is the difference between total revenue and total expenditure of the government.

Why are these bonds are being issued?

The US government needs to return some debts issued to finance corporate tax cut and the tax reforms in 2017.

''To meet these needs, its treasury needs a new reliable source and its other options are long-dated,'' said Mark Cabana, the head of US interest rates strategy at Bank of America.

These bonds will attract insurance companies that need to manage the liabilities of a longer-term. 

They can also help the government fund its infrastructure expenditure or another round of tax cuts.

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