U.S. Treasury Expects to Borrow Less
The U.S. Treasury on Monday estimated it will borrow $10 billion in financial markets during the current quarter, less than previously estimated as the buoyant economy continued to generate strong tax receipts.
The latest estimate assumes a Sept. 30 cash balance of $40 billion.
The Treasury also announced it retired a record $71.5 billion during the April-June quarter, with an ending cash balance of $51.3 billion.
Initially, the government estimated it would retire $65 billion in debt during the April-June quarter, with an ending cash balance of $35 billion. The previous record was a $25.7-billion pay down in the quarter ended June 30, 1996.
Monday’s Treasury announcement serves as a prelude to Wednesday’s quarterly financing news conference, at which Treasury officials will disclose their plans for next week’s sale of three-year notes, 10-year notes and 30-year bonds.
These securities will make up a major portion of Treasury borrowing for the quarter.
Previously, the Treasury estimated it would need to borrow $40 billion to $45 billion in the current quarter, assuming a cash balance of $40 billion on Sept. 30.
Looking ahead to the September-December quarter, the Treasury estimates it will need to borrow $45 billion to $50 billion, assuming a cash balance of $30 billion on Dec. 31. Earlier this month, the government posted a June surplus of $54.523 billion--a record for the month--as strong growth fueled a surge in tax collections and put the Treasury on track to reporting the lowest yearly deficit in almost two decades.
That suggests the deficit for the year ending Sept. 30 may fall to as low as $45 billion, analysts said, less than half the previous year’s deficit of $107.3 billion--and the smallest deficit since a $40.2 billion shortfall in fiscal 1979.
For the first nine months of the fiscal year, the budget deficit totaled $10.87 billion, the lowest shortfall for that period since 1979. The deficit for the same period a year ago was $74.016 billion.
The last time the U.S. posted an annual budget surplus was 1969, when revenues exceeded expenses by $3 billion. The largest annual deficit on record, $290 billion, came in fiscal 1992.
The Treasury typically reports a deficit most months because it spends more money than it receives, and borrows the rest. Monthly surpluses usually come in January, April, June and September, which coincide with quarterly tax payments. Indeed, the Treasury reported the largest one-month surplus ever in April--$93.939 billion.
