Treasury says expects to hit debt limit before 2013

WASHINGTON (Reuters) - The Treasury said on Wednesday it was still on track to hit the debt limit near the end of the year though emergency tools would allow the department to continue borrowing funds to keep the government operating through early 2013.

As of Monday, the Treasury was $235 billion below the $16.4 trillion legal amount the government is allowed to borrow. The Treasury did not provide details on when the emergency tools would run their course, but analysts have forecast this to happen in the latter half of February.

This gives the Obama administration some breathing room to broker a deal with Congress to find a solution to the so-called fiscal cliff or the $600 billion in tax increases and spending cuts that are due to kick in at the end of the year.

The committee of Wall Street firms that advises the Treasury on borrowing needs said the outlook for fiscal policy is dominating near-term economic prospects.

"A timely and orderly resolution of this uncertainty would contribute meaningfully to an improvement in the economic outlook," the committee said in its report to Treasury Secretary Timothy Geithner.

After next Tuesday's presidential and congressional elections, the administration and lawmakers will have less than two months to find a way to avoid the cliff.

The Treasury also announced a $72 billion quarterly funding of its 3-year, 10-year and 30-year debt securities, which will raise $8.9 billion in new cash. It also said it expects to keep its debt sales stable in coming months.

Earlier this week, the Treasury cut its borrowing estimates for the final quarter of the year due to higher revenues and less government spending.

The Treasury said it still had not made a decision on whether to allow investors to bid on securities that offer negative interest rates but said the department still planned on issuing floating-rate notes late next year.

(Reporting By Rachelle Younglai; Editing by Neil Stempleman)

Source: http://news.yahoo.com/treasury-says-expects-hit-debt-limit-2013-133305657--business.html

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