The U.S. Treasury has raised its borrowing forecast for the second quarter of 2025, anticipating a need to borrow $514 billion, significantly exceeding previous estimates.
Reasons for Increased Borrowing
The increase in borrowing forecast is attributed to the Treasury starting the quarter with much less cash than expected. The anticipated cash balance at the end of March was about $406 billion instead of the expected $850 billion.
Impact of the Debt Ceiling
The debt ceiling was reinstated at the beginning of January, limiting the Treasury's ability to issue any new Treasuries. If Congress fails to address the debt ceiling, the department will be forced to reduce bill issuance and exhaust its cash reserves more quickly.
Plans for the Next Quarter
The Treasury expects to borrow an additional $554 billion in the third quarter, still aiming for an $850 billion cash balance by the end of the quarter. However, this estimate relies on Congress taking action regarding the debt ceiling.
The increased borrowing forecast from the U.S. Treasury highlights significant financial challenges facing the country, particularly in light of Congress's inaction on the debt ceiling.
