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Gov't Plans to Borrow Less This Quarter By JEANNINE AVERSA, AP Economics Writer
Mon Aug 1, 5:38 PM ET
WASHINGTON - The government expects to borrow $59 billion from the credit markets this quarter — considerably less than previously estimated, the Treasury Department said Monday.
The improvement mostly reflects higher tax revenues, the department said. The previous borrowing estimate, in May, was $103 billion for the July-to-September quarter.
If the new borrowing projection of $59 billion proves accurate, that would mark the smallest amount of borrowing for the July-to-September period in five years.
The new estimate comes as the economy is enjoying solid growth, which is helping to boost tax revenues. The economy grew by an energetic 3.4 percent annual rate in the April-to-June quarter, the government reported last week. Private economists believe growth will be even better in the current quarter.
Against that backdrop, the White House recently lowered its projection for the federal budget deficit for this year to $333 billion, down from an initial estimate of $427 billion. Last year, the government ran up $412 billion in red ink, a record in dollar terms.
"The buoyant income growth that has accompanied the expanding economy has generated a fiscal dividend," Mark Warshawsky, assistant secretary of the Treasury Department's Office of Economic Policy, said Monday.
"Federal tax receipts have improved dramatically, sharply reducing the budget deficit. Tax receipts in fiscal year 2005 are on track to grow 14 percent — the largest such year-over-year increase in nearly 25 years," he said.
For the upcoming October-to-December quarter, Treasury expects to borrow $97 billion.
Treasury needs to borrow to finance the daily operations of government, including meeting interest payments on the national debt, which now stands at around $7.8 trillion.
The estimates are made as the department considers the government's financing needs, something its does on a quarterly basis. As part of that process, the department is widely expected to announce later this week that it will bring back the 30-year Treasury bond. The department had stopped selling new 30-year bonds in October 2001.
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