WASHINGTON: The US Treasury on Wednesday said it might reduce the amount it borrows through the sale of some debt securities because of a faster-than-expected narrowing of the nation's budget deficit.
"Treasury will continue to monitor projected financing needs and will consider further modest reductions in coupon auction sizes," said Treasury Assistant Secretary Matt Rutherford, who cited "the improving fiscal outlook."
Washington had reduced 2-year and 3-year debt auction sizes during the summer of 2013 as it became clear that higher taxes, an improving economy and sweeping budget cuts were reducing the government's borrowing needs.
Later that year, the Treasury put further reductions on hold as Washington debated raising a legal limit on public borrowing, and officials said on Wednesday the Treasury was holding the size of these auctions steady in the coming quarter.
In a news conference, Rutherford said the current debate in Congress over raising the debt ceiling this month was not a factor in the decision to hold steady the amount of coupon-bearing securities sold.
He repeated the Treasury's view that the department can use accounting measures to continue borrowing under the ceiling only until the end of February, and urged lawmakers to raise the borrowing limit soon.
Rutherford said the department would consider the coupon reductions for its next quarterly refunding announcement due on April 30.
The budget outlook continues to improve, at least for this year. The Congressional Budget Office on Tuesday reduced its estimate of the US budget deficit for fiscal year 2014, which began in October.
However, it said sluggish economic growth and stubbornly high unemployment will cause the improvement to be short-lived.
The CBO said the deficit will fall to $514 billion in fiscal 2014, which ends on Sept. 30. That is down from its previous estimate of $560 billion. The federal government ran $680 billion into the red in fiscal 2013.
Treasury department analysts think this means Washington is on track to borrow about $168 billion more than it needs in fiscal 2014, according to the minutes of a meeting between officials that was released with the Treasury's debt plans for the coming quarter.
This estimate is based on the CBO analysis as well as an assumption that issuance of coupon-bearing securities, such as notes and bonds, would be held steady and that the issuance of bills, which mature in one year or less, continue at the same rate they did in 2013.
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