Photographer: Andrew Harrer/Bloomberg

Treasury Cuts Borrowing Estimate by Almost Half This Quarter

The Treasury Department plans to borrow less money than previously estimated this quarter when the debt-ceiling suspension is due to expire, which may constrain its overall borrowing program.

The Treasury will issue $275 billion in net marketable debt from October through December, assuming a cash balance of $205 billion at the end of the period, according to a statement released Monday in Washington. The new estimate is $226 billion lower than the previous projection made in July.

From January to March, the Treasury predicted issuance of $512 billion in net-marketable debt, with a $300 billion cash balance by end-March.

While the debt cap has officially been suspended until Dec. 8, a swath of extraordinary measures could allow the Treasury to manage its funds for months after that. The steps would deplete Treasury’s cash balance, which it targets at a minimum of $150 billion.

A bigger issuance and a higher cash balance in the first three months of 2018 is a signal that the government is planning for the debt-ceiling to be lifted in adequate time.

Treasury Secretary Steven Mnuchin, when facing a looming deadline on raising the debt-cap in September, warned lawmakers about the negative consequences of delaying an increase, including stoking market uncertainty and potentially pushing up borrowing costs.

From July to September, the Treasury said it borrowed $189 billion in net marketable debt, compared with a July prediction of $96 billion. The cash balance was $159 billion at the end of September. “The increase in borrowing was driven primarily by the higher ending cash balance,” according to the statement.

The Treasury will release additional details about its borrowing plans during the quarterly refunding announcement on Wednesday.

— With assistance by Liz McCormick

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