Dow Jones Newswires - May 1, 2000
Treasury Expects to Pay Down $185 Billion Of Federal Debt During Second Quarter
WASHINGTON -- The Treasury Department said it expects to pay down a record $185 billion on the federal debt in the April-June quarter, with a cash balance of $50 billion on June 30.
The Treasury also said its net market borrowing needs for the following July-September quarter are also expected to be a paydown of about $47 billion, with a $45 billion cash balance at the end of September.
The projected April-June quarter paydown would eclipse the previous record of $113.8 billion in debt paid down in the same quarter in 1999. The second quarter has traditionally seen government coffers bulge as individual tax bills come due.
The Clinton administration has set a goal of paying off the national debt -- or at least the portion held by the public -- by 2013.
U.S. Treasury Secretary Lawrence Summers said Monday that the record-setting economic expansion is the main driver behind the projected paying down of the federal debt.
"The bulk of revenue strength has appeared in tax payments from individuals and corporations in connection with year 2000 liability," Mr. Summers said. "In addition, early collections data suggest that payments on 1999 liabilities in April were very strong."
While most of the progress toward eliminating the national debt has been made by allowing older debt to mature and simply not issuing new debt in its place, the Treasury Department has recently been taking a more active approach through a series of outright debt buybacks.
Through April, the Treasury Department had bought back $7 billion of securities in its first four buyback operations.
The estimated paydown in the April-June quarter is substantially larger than the Treasury previously anticipated. In January, the Treasury Department projected it would pay down about $152 billion in the current quarter, with a cash balance of $40 billion on June 30.
The Treasury Department said the increase in its estimate was the result of higher receipts.
In the recently ended January-March quarter, the Treasury Department paid down $20 billion on the federal debt, with an end-of-quarter balance of $45 billion -- slightly above the $17 billion paydown and $40 billion balance estimated in January.
The Treasury Department said that larger-than-expected paydown was the result of both higher receipts and lower outlays.
The borrowing estimates are the prelude to Wednesday's quarterly refunding news conference. Then, the Treasury Department will announce the details of its upcoming securities auctions.