Union Finance Minister Nirmala Sitharaman on Saturday denied that her ministry was reviewing issuance of foreign currency overseas sovereign bonds, The Economic Times reported. Sitharaman had proposed, while presenting the Union Budget on July 5, to raise a part of the government’s borrowings in other currencies.

A sovereign bond is a loan that the state promises to pay back at a set date, at a particular rate of interest. These are the most sought-after debt instruments for investors, simply because they offer an assured rate and one presumes the state is never going to default.

“I am not doing any review,” she told The Economic Times in an interview. “I have not been asked by anybody to do a review.” Sitharaman’s clarification came after Reuters claimed that the Prime Minister’s Office had asked the finance ministry to reassess the idea of issuing foreign currency overseas sovereign bonds.

Various reports had suggested that the government planned to borrow nearly $70,000 crore from the foreign overseas market. The total planned borrowing is about Rs 7.1 lakh crore in 2019-’20, reports said. However, Sitharaman said the government was yet to work out the details of such sovereign offers.

The idea of issuing sovereign bonds in other currency has been criticised by former heads of the Reserve Bank of India and other economists. They have argued that exposing the government’s liabilities to currency fluctuations may lead to long-term risks.

The matter had been a bone of contention between the government and the RBI since 2018. Former Finance Secretary Subhash Chandra Garg, who had originally pushed the idea of overseas sovereign bonds, was transferred to the power ministry on July 24. A day after this transfer, Garg announced that he had applied for voluntary retirement. He, however, claimed that there was no link between his transfer and his VRS application.