Question

Distinguish between Redeemable debt and Irredeemable debt.

State the difference between redeemable debt and irredeemable debt.

Answer 1

1. Loans that the Government promises to pay off at some future date are called redeemable debts whereas loans for which no promise is made by the Government regarding any date of maturity, but agrees to pay interest regularly for the bonds issued are called irredeemable debts.

2. Irredeemable debts are generally of long duration as compared to redeemable debts.

Answer 2

Redeemable debt	Irredeemable debt
Redeemable debt is that loan which is repayable by the government after a fixed period of time.	An irredeemable loan is that loan whose principal amount is not refunded by the government.
When the debt matures, the government pays back the amount to the lender.	The Government continues to pay interest on it regularly.