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A Commentary on "Measuring the Government's Borrowing Costs"

Published: Jan 01, 1985. Publicly Released: Jan 01, 1985.
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Highlights

This article, which appeared in the GAO Review, Vol. 20, Issue 2, Spring 1985, is in response to a request for readers' comments on an article in the winter 1985 GAO Review that proposed using a variable-interest-rate methodology to more accurately account for the costs of federal credit programs. The comments suggest that the prevailing-rate approach would provide the best estimate of the interest costs because the rate on borrowed money to fund a loan of the same maturity is an average of the rates expected to prevail in the future on shorter-term borrowings. Other points were mentioned concerning the variable-rate approach in the context of measuring specific program budgetary costs.

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