After prepayment of $3billion multilateral loans in March last, the government is mulling advance repayment of some of the bilateral loans this fiscal in the face of burgeoning foreign exchange reserves, now at $78 billion.

The Centre is now in the process of identifying the loans it intends to prepay, including some bilateral loans, and these would be finalised in a month, official sources told PTI.

They, however, could not indicate the quantum of such loans but one estimate puts it around $2 billion.

This move comes in the light of Centre's success in pre-paying the pool loans of around $3.0 billion taken from the World Bank and Asian Development Bank, in 2002-03.

Finance Minister Jaswant Singh had, in the Budget, said the average interest rate on government's outstanding external debt had fallen from 11 per cent in 1999-2000 to 9.4 per cent in 2001-02, but it was not enough.

Some of the bilateral loans with which the government was not very comfortable, would be prepaid this year, the sources said adding there would be some high cost loans from ADB and World Bank, which would also be taken up for prepayment as they carried interest ranging from 9-12 per cent.

As a measure to contain fiscal deficit, the Centre is also planning to buyback the high interest rate bearing government securities or G-secs, estimated to be around Rs 80,000 crore (Rs 800 billion), to replace with low coupon, and is now working on the premium to be paid to the banks.