Zimpapers Logo

The amount of money the US government has to pay its bills tumbled to the lowest since 2021, posing a risk the administration will run out of funds by early next month if the statutory debt limit isn’t raised or suspended before then.

The Treasury’s cash balance fell to just US$49,5 billion on Wednesday, according to data published Thursday.

That’s down from  US$76,5 billion a day earlier and $140 billion on May 12.

The Treasury’s bank account has been under downward pressure recently because of measures being taken to avoid breaching the US$31,4 trillion debt cap.

Wednesday’s move was the biggest one-day drop since May 15.

“This just shows you how close to the abyss we’re getting,” said TD Securities strategist Gennadiy Goldberg. “While some in Congress question the Treasury’s math, I think the cash balances speak volumes: we’re going to be going over the cliff very soon. Honestly, we’re on borrowed time.”

The government has also been engaging in various accounting gimmicks to steer clear of a breach, and had around US$92 billion of those up its sleeve as of last Tuesday.

The latest developments on the cash pile also come amid ongoing warnings from Treasury Secretary Janet Yellen, who said Wednesday that signs of market stress are beginning to emerge as the federal government moves closer to exhausting its cash, and that the administration’s focus is on completing a debt-limit deal rather than contingency planning for a default.

Speaker Kevin McCarthy said issues remain in negotiations with the Biden administration on raising the federal debt limit as the clock ticks down to the point when the US Treasury runs out of cash. – Bloomberg