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An empty street in New York, U.S. /VCG
The U.S. Treasury Department on Monday said it plans to borrow nearly three trillion U.S. dollars in the second quarter of 2020 – more than five times larger than the previous record as the federal government spends at a frantic pace to mitigate the impact of the coronavirus on the U.S. economy.
In a statement, Treasury said it would borrow 2.999 trillion U.S. dollars during the April-June quarter – higher also than the previous record borrowing for a full fiscal year of 1.8 trillion U.S. dollars in 2009.
"It is larger than what we would typically do in a year," a senior Treasury official said. The Treasury's net borrowing last fiscal year, by contrast, was 1.28 trillion U.S. dollars.
Monday's estimate is 3.055 trillion U.S. dollars more than the original target for the quarter issued in early February, when it was still unclear whether the coronavirus would spread widely in the United States. At that time, it appeared as though the federal government would pay down 56 billion U.S. dollars of debt in the current quarter, leading Treasury to forecast a negative estimate for new net marketable debt in the period.
But with the virus spreading rapidly soon after that projection - and tanking the economy along with it – Congress has appropriated nearly three trillion U.S. dollars to help individuals and companies weather the business shutdowns implemented to slow the pace of the pandemic.
The new borrowing target is more than five times larger than the previous single-quarter record set back in the second half of 2008 to combat the financial crisis.
"Even before the pandemic there was going to be some increased funding needs going forward. But now all things are out the window," said Mike Lorizio, senior fixed income trader at Manulife Investment Management in Boston.
Asked if there was capacity in the market to absorb such a huge volume of debt in just three months, a senior Treasury official said: "We do believe that it's out there."
(CGTN)
