Treasury Makes Sharp Reduction in Borrowing Plans for Third Quarter

The U.S. government expects to borrow a much-smaller-than-forecast $59 billion in net debt in the July-to-September quarter because of buoyant tax receipts, the Treasury Department said Monday.

The Treasury had said in May that it expected to borrow $103 billion in the current period. If realized, the $59 billion in borrowing would be the smallest for a July-to-September quarter since 2000.

“The decrease in borrowing is primarily the result of higher receipts and higher net issuances of state and local government series securities,” the Treasury said in its quarterly estimate of market financing needs.

The government will probably borrow about $97 billion in the October-December period, the first-quarter of the next fiscal year, Treasury said, adding it may need to borrow more next year unless the budget deficit outlook changes.

“Looking forward, we see a larger financing need for [fiscal year] 2006 as a result of increases in maturing debt and fiscal needs,” it said.

On Wednesday, the Treasury is expected to announce that it will resume issuing 30-year bonds next year to help with its debt management.

The Treasury said foreign ownership of privately held U.S. public debt had stabilized around a record-high 53%. It said this level is on par with the foreign holdings ratios of other Group of 7 countries such as France and Germany.

The government paid down $79 billion in net debt in the recently completed April-to-June quarter, the largest pay-down since the same quarter in 2001, Treasury said.