Washington: The US plans to borrow a record USD 2.9 trillion during the April-June quarter to deal with the raging coronavirus pandemic that has wreaked the world’s largest economy and claimed the lives of over 69,000 people in the country.
According to The Wall Street Journal, the sum is more than five times the previous quarterly record, set at the height of the 2008 financial crisis.
During the April-June quarter, the US Treasury expects to borrow USD 2.9 trillion in privately-held net marketable debt, assuming an end-of-June cash balance of USD 800 billion, an official statement said on Monday.
The increase in privately-held net marketable borrowing is primarily driven by the impact of the COVID-19 outbreak, including expenditures from new legislation to assist individuals and businesses and changes to tax receipts, it said.
The latest spending packages are estimated to be worth about 14 per cent of the country’s economy. The government has also extended the annual April 15 deadline for tax payments, adding to the cash crunch.
The borrowing estimate is USD 3,055 billion higher than what was announced in February this year, the US Treasury said.
During the third quarter, Treasury expects to borrow USD 677 billion in privately-held net marketable debt, assuming an end-of-September cash balance of USD 800 billion, the statement said.
During the first quarter, the Treasury borrowed USD 477 billion in privately-held net marketable debt and ended the quarter with a cash balance of USD 515 billion, it said.
In February, Treasury estimated privately-held net marketable borrowing of USD 367 billion and assumed an end-of-March cash balance of USD 400 billion, the statement said.
The USD 110 billion increase in borrowing resulted primarily from the higher end-of-quarter cash balance, it said.
The US Congressional Budget Office last month predicted the budget deficit would hit USD 3.7 trillion this year, while the national debt soared above 100 per cent of the GDP.
Last week, Jerome Powell, the chair of America’s central bank, said he would have liked to see the US government’s books be in better shape before the pandemic.
The coronavirus pandemic has claimed over 69,000 lives and infected over 1,180,000 people in the US, the worst hit nation.
Also read: Trump White House rejects projection showing new surge in Covid outbreak