Treasury scales back loans to save US$232b
By Martin Crutsinger |
August 5, 2010, Thursday
|
Print Edition
Print Edition
THE United States Treasury Department yesterday said it has scaled back its annual borrowing capacity by US$232 billion since April and plans further gradual cuts this year.
The cuts follow a massive expansion of the government's borrowing over the past two years as the annual federal deficit hit US$1.41 trillion last year. This year it is forecast to hit a new record of US$1.47 trillion.
Treasury officials said the reductions in borrowing capacity can be achieved because the improving economy is boosting tax receipts and many of the emergency programs enacted to deal with the deep recession and financial crisis are being phased out.
Officials said that since April, the cuts already made total US$232 billion in reduced borrowing capacity over a 12-month period.
Those cuts over 12 months include US$72 billion saved from the two-year note, US$60 billion reduced from the three-year note and another US$60 billion from the five-year note. In addition, projected reductions of US$36 billion have been made in the seven-year note and US$4 billion in the 10-year note.
"Based on current fiscal forecasts, Treasury expects to continue to decrease coupon auction sizes at a gradual pace," Treasury said.
Treasury on Monday announced that it has trimmed its estimate of the amount it will need to borrow this budget year to US$1.438 trillion.
That would still be the second highest borrowing total in history, but it will be 19.5 percent lower than last year's record borrowing of US$1.786 trillion. The current budget year will end September 30.
Last month, the administration estimated that the overall budget deficit this year will total a record US$1.47 trillion.
The cuts follow a massive expansion of the government's borrowing over the past two years as the annual federal deficit hit US$1.41 trillion last year. This year it is forecast to hit a new record of US$1.47 trillion.
Treasury officials said the reductions in borrowing capacity can be achieved because the improving economy is boosting tax receipts and many of the emergency programs enacted to deal with the deep recession and financial crisis are being phased out.
Officials said that since April, the cuts already made total US$232 billion in reduced borrowing capacity over a 12-month period.
Those cuts over 12 months include US$72 billion saved from the two-year note, US$60 billion reduced from the three-year note and another US$60 billion from the five-year note. In addition, projected reductions of US$36 billion have been made in the seven-year note and US$4 billion in the 10-year note.
"Based on current fiscal forecasts, Treasury expects to continue to decrease coupon auction sizes at a gradual pace," Treasury said.
Treasury on Monday announced that it has trimmed its estimate of the amount it will need to borrow this budget year to US$1.438 trillion.
That would still be the second highest borrowing total in history, but it will be 19.5 percent lower than last year's record borrowing of US$1.786 trillion. The current budget year will end September 30.
Last month, the administration estimated that the overall budget deficit this year will total a record US$1.47 trillion.
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