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Treas.
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Department of the Treasury
PRESS RELEASES
DEPARTMENT
TREASURY
OF
THE
TREASURY
NEWS
~/78~9~. . . . . . . . . . . . . . . . . . . . . . . . . .. .
............................
OFFICE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220 - (202) 622·2960
FOR IMMEDIATE RELEASE
April 4, 1996
STATEMENT OF TREASURY SECRETARY ROBERT E. RUBIN
"Ron Brown was a friend, and I and so many others will miss him greatly. America
has lost an extraodinarily energetic, creative and decent public servant. From the very
beginning, Ron and the rest of us on the President's economic team worked so well together.
His spirit and his good sense were invaluable to all of us. Ron Brown's record as Commerce
Secretary is without peer in th~ Department's history. His loss is deeply tragic, and my
thoughts and prayers are with his family, his friends, and his staff."
-30-
RR-989
For press releases, speeches, pllblic schedllies and official biographies. call Ollr 24-hollr fax line at (202) 622·2040
DEPARTMENT
OF
THE
TREASURY (~'~
\~ 'rt,· ~!
\~
'\"/
TREASURY
NEW S
~~J78r9~. . . . . . . . . . . . . . . . . . . . . . . . . .1
............................
OFFICE OF PUBUCAFFAIRS -1500 PENNSYLVANlAAVENVE, N.W. - WASHINGTON, D.C .• 20220· (202) 622-2960
FOR IMMEDIATE RELEASE
April 4, 1996
STATEMENT BY DEPUTY TREASURY SECRETARY LAWRENCE H. SUMMERS
"Lee Jackson, United States Executive Director of the European Bank for
Reconstruction and Development, died in the crash of the plane carrying the U.S. trade
mission to Croatia April 3. This news was a great shock to his many friends and colleagues
both within and outside the Treasury and the EBRD. Lee will be remembered and sorely
missed here for his diligence, intellect and thoughtfulness. He faced even the most difficult
situations with good judgment and good cheer.
"During his tenure at the EBRD, Lee vigorously advanced U.S. interests and provided
effective leadership at the Board and throughout the Bank. The Bank was a seriously
troubled institution when Lee arrived there in 1993. Today it is a healthy one that is making
a major contribution in bringing free markets to the Former Soviet Union and Eastern
Europe. Lee's work there was a major part of that transformation. We are enormously
grateful for his exceptional service to the Treasury Department and to the nation. Our
deepest sympathies are with his family and friends."
-30-
RR-990
For press releases, speeches, public schedules and official biographies, call our 24-hollr fax line at (202) 622-2040
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
FOR RELEASE AT 3:00 PM
April 4, 1996
Contact: Peter Hollenbach
(202) 219-3302
PUBLIC DEBT ANNOill\CES ACTIVITY FOR
SECURITIES IN THE STRIPS PROGRAM FOR MARCH 1996
Treasury's Bureau of the Public Debt announced activity figures for the month of March 1996,
of securities within the Separate Trading of Registered Interest and Principal of Securities
program (STRIPS).
Donar Amounts in Thousands
Principal Outstanding
(Eligible Securities)
$884,881,516
Held in Unstripped Form
$659,454,478
Held in Stripped Form
$225,427,038
Reconstituted in March
$12,009,137
The accompanying table gives a breakdown of STRIPS activity by individual loan description.
The balances in this table are subject to audit and subsequent revision. These monthly figures
are included in Table VI of the Monthlv Statement of the Public Debt, entitled "Holdings of
Treasury Securities in Stripped Form."
Information about "Holdings of Treasury Securities in Stripped Form" is now available on the
Department of Commerce's Economic Bulletin Board (EBB). The EBB, which can be
accessed using personal computers, is an inexpensive service provided by the Department of
Commerce. For more information concerning this service call 202-482-1986.
000
PA-216
(RR-99l)
TAB_E VI - HOLD!NGS OF TREASURY SECURITIES IN STRIPPED FORM MARCH 31 1996
(In thousands)
.
-----
II
II
II
II
Pnnclpal Amount Outslandlng
Loan Description
Note C-1996
Note D·1995 .
Note A-1997
Note 8-1997
8·718% Note C-1997.
8·1/8% Note A-1998
9% Note 8·1998 ...
9·1/4% Note C-1998. '"
8-718'10 Note 0-1998 ..
B-7I8% Note A-19S9 ...
9·118% Note 8-1999 ...
B% Note C-1999 .........
7.7/8% Note 0-1999 .....
8-112% Note A-2000 .....
8-718% Note 8-2000 ......
8-3/4% Note C-2000 "'"
8·112% Note 0-2000 ......
7 -3/4% Note A-2001 ......
8'10 Note 8-2001 ..........
7-718% Note C-2001 ......
7·112% Note 0-2001 ......
7-112% Note A-2002 ......
6-318% Note 9-2002 ......
6-114% Note A-2003 ......
5-314% Note 8-2003 ......
5-7/8% Note A-2004 ......
7-1/4% Note 9-2004 ......
7-1/4% Note 0.2004 ......
7 -718% Note 0-2004......
7-1/2% Note A-2005 ......
6-112% Note 9-2005 ....
6-112% Note C-2005 ......
5-7/8% Note 0-2005......
5-5/8% Note A-200S ......
11-5/8% Bond 2004.......
i 2% Bond 2005...........
10-3/4% Bond 2005 .......
9-3/8% Bond 2006 .......
11-3/4% Bond 2009-14 ....
11-1/4% Bond 2015 .......
10-5/8% Bond 2015 .......
9-7/8% Bond 2015 ........
9-114% Bond 2016 ........
7-1/4% Bond 2016 .....
7-112% Bond 2016 ........
8-3/4% Bond 2017 ........
8-118% Bond 2017 ........
9-118% Bond 2018 ........
9% Bond 2018 ............
8-718% Bond 2019 ........
8-1/8% Bond 2019........
8-112% Bond 2020 ........
8-3/4% Bond 2020........
8·3/4% Bond 2020 ........
7-7/8% Bond 2021.. ......
8·118% Bond 2021.. ......
8-118% Bond 2021 ...
8% Bond 2021.. ..........
7-1/4% Bond 2022 ....
7·5/8% Bond 2022 ........
7-1/8% Bond 2023 ........
6·1/4"10 Bond 2023 .....
7-112% Bond 2024.......
;·5/8% Bond 2025 ......
6-718% Bond 2025 ......
6'10 90nd 2026 ..... ..
7·3/8%
7.1/4%
8-112%
8-5/8%
"
Portion Held in
Unstnppeo Form
70tal
Matun:y Date
05/15195 ..
11/15195 .
05/15/97
20.085.643
20,258,810
9,921,237
9,362.836
9,808.329
9,159,068
9.165,387
11,342,646
9.902,875
9,719,623
10.047,103
10,163,644
08/15197 .
11/15197
02115198 ......
05/15198 ..
08/15/SB . ....
11/15/96 .
02115/99 .
05115199
08115199
11/15199 .....
10,n3,960
02115100......
05115100 .....
08115100......
11115100.....
02115101.. ....
05115101.. ..
10,673,033
10,49&,230
11,080,646
11.519,682
11,312,B02
12,398,083
12,339,185
24,226,102
11,714,397
23,859,015
23,562,691
28,011,028
12,955,077
14,440,372
13,346,467
08/15101.. ....
11115101 ......
05115102......
08115102 ...
02115103 ......
08115103 .....
02115104 ......
05115104 .....
16.068.043
16,591,610
8,359.237
7,006,036
6,957,129
7,746,588
7,065,587
8,569,846
6,n8,075
8,258,823
7,026,303
7,575,969
7,285,960
7,967,833
5,763,430
6.950,886
7,370,882
8,112,802
8,931,708
9,663,985
21,501,382
10,032,957
22,702,215
23,060,451
27,n3,428
08115122 .....
10,158,883
21,418,606
11,113,373
11,958,888
12,163,482
32,798,394
10.352,790
11/15122 ....
10.699,626
02115123......
18.374,361
22,909.044
11.469,662
11,725,170
12.602,007
12.904,916
12,953,477
14,435,S72
13,312,867
14,373,760
13,834,354
14.739.504
15,002,580
15,209,920
15,513,587
4,383,406
2,522,708
7,412,113
4,750,604
2,187,184
9,761,399
2,331,356
3,605,459
6,704,454
18,600,351
18,140,208
9,858,489
9,183,258
2,590.239
2,969,870
5,546.798
16,714,952
6,321,668
4,346,403
5,577,646
10,188,573
4,829,608
3,738,842
6,276,544
8,264,790
3,672,426
14,503,961
22,571,988
4.955,262
7,075,570
12,466,647
12,904,916
884,881,516
659,454,478
08/1SI04 ....
11115104 ...
02115105 .....
05115/05 ....
08/15105 ......
11115105 ......
02115106 ....
11115104 ......
14,373,760
13,834,754
14,739,504
15,002,580
15,209,920
15,513,587
8,301,806
4,260,758
9,269,713
4,75S,916
6.005.584
12,667,799
7,149,916
6,899,859
7,266,854
18,823,551
18.864,448
18,194,169
14.016,858
8,708,639
9.032,870
19,250,798
20,213,832
05115105 ......
08/15105 ......
02115106 ......
11/15/14......
02115115 ......
08115/15 ......
11/15/15 ......
02115116 ......
05/15/16 ......
11/15/16 ......
05/15/17 ......
08/15/17 ......
05/15/18 ....
11/15'18 ......
02115/19 ..
08115/19 ......
02115120 .....
05115120 ......
10,228,868
08/15120 ....
02115121
C5l~512~ ......
08115121 ...
11115121 . ..
08115123.
11/15124
02115125 . ...
08115125
02115126
Total.
;=:::=============================;====
Portion Held ,n
Stnpped Form
4.017.600 II
3,667,200 II
1,562,000 II
2,356,800 II
2,851,200 II
1,412,480 II
2,099,800 II
2,772,BOO II
3,124,BOO II
1,460,BOO II
3,020,BOO II
2,5B7,675 II
3,488,000 II
2,705,200 I I
4,732,800 II
4,129,760 II
4,148,800 II
3,200,000 I I
3,466,375 II
2,675,200 I
2,724,720 r
1,681,440 I
1,156,800 I
502,240
237,600
1,600
4,800
33,600
0
400
0
0
0
0
3,918,400
1,738,050
1,857,600
5,312
3,818,400
2,906,400 I
4,818,5S0
3.294,400
562,400
223,200
724,240
8.335,680
4,833,600
6,118,400
6,063,000
13,704,000
3,498,880
3.907,200
5,812,480
1S,840,960
924,800
7,129,280
8,424,640
26,521,850
2.088,000
7,027,200 II
3.870,400 II
337,056 II
6,514,400 II
4.649,600 II
135,360 II
Reconstituted
This Month 111
43,200
3,200
118,000
91,200
24,000
20,800
30,600
118,400
113,600
51,200
0
58,600
68,BOO
8,400
19,200
74,560
116,000
133,600
93,000
108,800
140,480
121,600
108,800
195,392
0
0
3,200
0
0
21,280
0
0
0
0
334,400
123,150
558,400
0
186,400
628,640
27,200
321,600
23,200
75,200
340,480
541,120
348,600
451,200
235,000
744,000
617,920
139,600
518,080
1,266,560
65,600
249,920
340,160
493,875
120,800
83,200
348,800
216,480
011
281,8 4 0
441.600
0
0
II
12,009,137
225,427,038
=======;================:;=========-=======-~==============z===_==----=====:===========--======
111 EtrectM! May 1, 1987, secum,es held ,n stnpped
torm were eligible for reconstitution to the" unstnpped tOIm.
Note On the 4th workday o~ each mo~tn Ta:;e VI Will be available a~er 3 00 p m eastem time on the Commerce Departmenrs
Economic Bulletin Board (ESS) Tne te'e~l'.One number lor more Information about EBB IS (202) 482·1986 The balances
In thiS table are S;;bjec: to a;;dlt an~ Sucsi!Quent adjustments
UBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
FOR IMMEDIATE RELEASE
April 8, 1996
CONTACT: Office of Financing
202-219-3350
RESULTS OF TREASURY'S AUCTION OF 2-YEAR NOTES
Tenders for $18,250 million of 2-year notes, Series AD-1998,
to be issued April 10, 1996 and to mature March 31, 1998
were accepted today (CUSIP; 912827X31).
The interest rate on the notes will
All
competitive tenders at yields lower than
accepted in
full. Tenders at 6.144% were allotted 48-0.- ---All noncompetitive and
successful competitive bidders were allotted securities at the yield
of 6.144%, with an equivalent price of 99.965. The median yield
was 6.10'2%; that is, 50% of the amount of accepted competitive bids
were tendered at or below that yield. The low yield was 6.070%;
that is, 5% of the amount of accepted competitive bids were
tendered at or below that yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
TOTALS
Received
$35,300,203
Accepted
$18,250,003
The $18,250 million of accepted tenders includes $1,167
million of noncompetitive tenders and $17,083 million of
competitive tenders from the public.
In addition, $1,818 million of
high yield to Federal Reserve Banks
international monetary authorities.
of tenders was also accepted at the
Reserve Banks for their own account
securities.
RR-992
tenders was awarded at the
as agents for foreign and
An additional $1,598 million
high yield from Federal
in exchange for maturing
UBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
CONTACT: Office of Financing
202-219-3350
FOR IMMEDIATE RELEASE
April 8, 1996
RESULTS OF TREASURY'S AUCTION OF I3-WEEK BILLS
Tenders for $13,580 million of 13-week bills to be issued
April 11, 1996 and to mature July 11, 1996 were
accepted today (CUSIP: 9127942Z6).
RANGE OF ACCEPTED
COMPETITIVE BIDS:
Low
High
Average
Discount
Rate
5.00%
5.03%
5.03%
Investment
Rate
5.13%
5.16%
5.16%
Price
98.736
98.729
98.729
Tenders at the high discount rate were allotted 40%.
The investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
TOTALS
Type
Competitive
Noncompetitive
Subtotal, Public
Federal Reserve
Foreign Official
Institutions
TOTALS
5.01 -- 98.734
RR-993
Received
$51,216,952
Accepted
$13,580,152
$45,962,940
1, 484.792
$47,447,732
$8,326,140
1, 484. 792
$9,810,932
3,307,320
461,900
$51,216,952
5.02 -- 98.731
461. 900
$13,580,152
UBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
FOR IMMEDIATE RELEASE
April 8, 1996
CONTACT: Office of Financing
202-219-3350
RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
Tenders for $13,561 million of 26-week bills to be issued
April 11, 1996 and to mature October 10, 1996 were
accepted today (CUSIP: 9127943K8).
RANGE OF ACCEPTED
COMPETITIVE BIDS:
Low
High
Average
Discount
Rate
5.17%
5.19%
5.19%
Investment
Rate
5.38%
5.40%
5.40%
Price
97.386
97.376
97.376
Tenders at the high discount rate were allotted 28%.
The investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
TOTALS
Type
Competitive
Noncompetitive
Subtotal, Public
Federal Reserve
Foreign Official
Institutions
TOTALS
5.18 - 97.381
RR-994
Received
$50,348,670
Accepted
$13,560,510
$44,487,485
1, 226,185
$45,713,670
$7,699,325
1,226 1,185
$8,925,510
3,300,000
1, 335,000
$50,348,670
1,335,000
$13,560,510
NEWS
TREASURY
omCE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220· (202) 622-2960
FOR IMMEDIATE RELEASE
April 9, 1996
Contact:
Jon Murchinson
(202) 622-2960
MOZELLE THOMPSON PROMOTED TO PRINCIPAL DEPUTY ASSISTANT SECRETARY
Treasury Secretary Robert E. Rubin announced Tuesday he has promoted Mozelle W.
Thompson to the position of Principal Deputy Assistant Secretary for Government Financial Policy.
"Mozelle Thompson has been an integral member of the Treasury Department for the past two
and a half years," Secretary Rubin remarked. "He has provided valuable counsel on a host of
important issues related to government financing and privatization."
As PrinCipal Deputy Assistant Secretary, Mr. Thompson is responsible for the oversight of
the Federal credit and finance policies for domestic agencies and corporations. Included in this
portfolio are the operations of the Federal Financing Bank and the Office of Corporate Finance, which
provides guidance on the privatization of Federal assets and operations.
Mr. Thompson will continue to oversee Treasury's privatization activities regarding the United
States Uranium Enrichment Corporation, the College Construction Loan Administration (Connie Lee)
and the Naval Petroleum Reserves at Elk Hills, CA. He will also continue to lead Treasury's
f
initiatives on the financing of the District of Columbia.
Mr. Thompson joined Treasury as Deputy Assistant Secretary in August 1993. Prior to
joining the department, he held a number of positions with the State of New York. Mr. Thompson
was most recently senior vice president, counsel and secretary to the boards of the New York State
Housing Finance Agency, the State of New York Mortgage Agency and the New York State Medical
Care Facilities Finance Agency. He has practiced law with the firm of Skadden, Arps, Slate,
Meagher and F10m in New York City and was a law clerk for U.S. Federal Judge William M.
Hoeveler in Miami.
Mr. Thompson is a graduate of Columbia College and Columbia Law School and holds a
Masters in Public Administration from Princeton University's Woodrow Wilson School of Public and
International Affairs. He was born in Pittsburgh, PA on December 11, 1954.
-30-
RR-995
Far press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
NEWS
TREASURY
OFFICE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W .• WASIllNGTON, D.C .• 20220. (202) 622.2960
FOR RELEASE AT 2:30 P.M.
April 9, 1996
CONTACT:
Office of Financing
202/219-3350
TREASURY'S WEEKLY BILL OFFERING
The Treasury will auction two series of Treasury bills
totaling approximately $21,000 million, to be issued April 18,
1996. This offering will result in a paydown for the Treasury of
about $47,825 million, as the maturing bills total $68,829 million
(including the 55-day cash management bill issued on February 23,
1996, in the amount of $29,192 million and the lS-day cash
management bill issued on April 3, 1996, in the amount of $14,008
million) .
Federal Reserve Banks hold $7,172 million of the maturing
bills for their own accounts, which may be refunded within the
offering amount at the weighted average discount rate of accepted
competitive tenders.
Federal Reserve Banks hold $12,631 million as agents for
foreign and international monetary authorities, which may be
refunded within the offering amount at the weighted average
discount rate of accepted competitive tenders. Additional amounts
may be issued for such accounts if the aggregate(amount of new
bids exceeds the aggregate amount of maturing bills.
Tenders for the bills will be received at Federal
Reserve Banks and Branches and at the Bureau of the Public
Debt, Washington, D. C. This offering of Treasury securities
is governed by the terms and conditions set forth in the Uniform
Offering Circular (31 CFR Part 356) for the sale and issue by the
Treasury to the public of marketable Treasury bills, notes, and
bonds.
Details about each of the new securities are given in the
attached offering highlights.
000
Attachment
RR-996
Far press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622·2040
HIGHLIGHTS OF TREASURY OFFERINGS OF WEEKLY BILLS
TO BE ISSUED APRIL 18, 1996
April 9, 1996
Offering Amount .
$10,500 million
$10,500 million
Description of Offering:
Term and type of security
CUSIP number
Auction date
Issue date
Maturity date
Original issue date
Currently outstanding
Minimum bid amount
Multiples .
91-day bill
912794 3A 0
April 15, 1996
April 18, 1996
July 18, 1996
January 18, 1996
$12,547 million
$10,000
$ 1,000
182-day bill
912794 Z9 8
April 15, 1996
April 18, 1996
October 17, 1996
October 19, 1995
$18,482 million
$10,000
$ 1,000
The following rules apply to all securities mentioned above:
Submission of Bids:
Noncompetitive bids
Competitive bids
Accepted in full up to $1,000,000 at the average
discount rate of accepted competitive bids
(1) Must be expressed as a discount rate with
two decimals, e.g., 7.10%.
(2) Net long position for each bidder must be
reported when the sum of the total bid
amount, at all discount rates, and the'net
long position is $2 billion or greater.
(3) Net long position must be determined as of
one half-hour prior to the closing time for
receipt of competitive tenders.
Maximum Recognized Bid
at a Single Yield
35% of public offering
Maximum Award .
35% of public offering
Receipt of Tenders:
Noncompetitive tenders
Competitive tenders
Payment Terms .
Prior to 12:00 noon Eastern Daylight Saving time
on auction day
Prior to 1:00 p.m. Eastern Daylight Saving time
on auction day
Full payment with tender or by charge to a funds
account at a Federal Reserve Bank on issue date
UBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
FOR IMMEDIATE RELEASE
April 9, 1996
CONTACT: Office of Financing
202-219-3350
RESULTS OF TREASURY'S AUCTION OF 5-YEAR NOTES
Tenders for $12,006 million of 5-year notes, Series G-2001,
to be issued April 10, 1996 and to mature March 31, 2001
were accepted today (CUSIP: 912827X49).
The interest rate on the notes will be 6 3/8%. All
competitive tenders at yields lower than 6.415% were accepted in
full. Tenders at 6.415% were allotted 53%. All noncompetitive and
successful competitive bidders were allotted securities at the yield
of 6.415%, with an equivalent price of 99.832. The median yield
was 6.397%; that is, 50% of the amount of accepted competitive bids
were tendered at or below that yield. The low yield was 6.350%;
that is, 5% of the amount of accepted competitive bids were
tendered at or below that yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
TOTALS
Received
$31,190,351
Accepted
$12,006,231
The $12,006 million of accepted tenders includes $604
million of noncompetitive tenders and $11,402 million of
competitive tenders from the public.
In addition, $650 million of tenders was awarded at the
high yield to Federal Reserve Banks as agents for foreign and
international monetary authorities. An additional $1,500 million
of tenders was also accepted at the high yield from Federal
Reserve Banks for their own account in exchange for maturing
securities.
RR-997
D EPA R TI\,l E N.T :.0 F
TREASURY (
T H-E"·'.T'R E A SUR Y
~~~
NEWS
1789
ISOO PENNSYLVANIA AVENUE, N.W.· WASHINGTON, D.C.' 20220' (202) 622-2960
FOR IMMEDIATE RELEASE
April 9, 1996
CONTACT:
Office of Financing
202-219-3350
TREASURY CIARIFIES WEEKLY BILL ANNOUNCEMENT OF APRIL 9, 1996
Federal Reserve Banks hold $12,631 million as agents for
foreign and international monetary authorities.
Up to $3.000
million of these securities may be refunded within the offering
amount at the weighted average discount rate of accepted
competitive tenders. Additional amounts may be issued for such
accounts to the extent the aggregate amount of new bids exceeds
$3,000 million.
RR-998
DEPARTMENT
OF
THE
TREASURY
(~'fl)
NEW
S
TREASURY
1I................................\.t~~~::·~~.l./..............................
1I
OFFICE OF PUBUC AFFAIRS. 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C .• 20220. (202) 622·2960
FOR IMMEDIATE RELEASE
Remarks as prepared for delivery
April 11, 1996
REMARKS OF TREASlJRY SECRETARY ROBERT E. RUBIN
REBREMENT SA VINGS AND SECURITY ACT
Tbi!' is an important day for Americans with rcsped !o retirement. In a few
moments, the President \'~ri!l discuss the RetirCIJ1ent Savillg~ anJ Securlty Act which
(;OntaiIL) sume very concrde proposals to expand acce~s to pensions, to help small
b'usine:,sf's set up pefJ~i(lnS, and TO encourage Americans tu save lllore,
Raising nur saving') fRte is nltkal'10 ~ontinuing and improviilg Il!-'iilll ~he ~0lid
economic growth of the past three. yt.'..:.lfS. Ii i~:11~u ~:enHa! to e;:-.sllring tIHi AJI~t.:ricc.~l"l
~'r ;. t ..... e.')O,lfCCS
~ "
\ f'or th Cl.
\'.. ft;;,.t:.,.·,
., ~l:,~iJ:-._,<i~l
. ." .', T ,',', }t7d
" .'...
na\e .)liulClcn
1!~.)l)l;nt
.• , nJ_,1~n ....~ J.T'.,) e",,!:'\\)nal
;,wvir;,gs W~(e .1u~t four and ;)::Ie-tair percent of disp')s~hle ie'f !!1e, and :n(i!'i; far too Jittif' ..
'
Other industri:tlizeci.;latioill, and the mpidly dev~loping 11:;J.1.ions of Asia, save significantly
l.uon.;;: with 58\~(!,g~ ra~es Litten ranging fram half agai,n =l~ high ::I.S ours to doubi·; ours
•
,
1
r
A'I
'"
•
.'
"','
.. ,
,
~nl::"'l(I.ruiHistr(jt~(ln
has worked long ~,uld bard on tJJC natiOI)'S uVr'!ralisav!.ngs rat~,
starting \,vlth briIlging dow,ll the ddkit. Two years ago the ~)resjdem 5igoed·legislation
my friend and prcdeCeSSf)r as Secretary uf tile Treasury,. Lloyd Bel,~,;,en)was j~rtltrumental
, in developing. That legi~latioll has r~Juced pension undenunding f"-IT thi;! first time in a
decade and protects the benefits of uver 40 rrimon work~:j~. Ju~t ,1 few (Uoilths ago the
President vetoed .3. bll: tl~;lt would have lei. ('orporariom; bro2.l!iy t:::? per,slOD p1anll.
Today, we're building on that success.
Lloyd Bentsen recognized long ago that Americaa wor kers must be given acress
to pensions and that their pensions must be protected, and almost singlehandedly put
through the most sweeping pension reform program in our history in the 19705. He is
also known as the father of the Individual Retirement Account.
It is my pleasure to introduce a man deeply concerned with the retirement
security of working Americans, Senator and Secretary Lloyd Bentsen.
RR-999
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PUBLIC DEBT NEWS
Department of the Treasury - Bureau of the Public Debt - Washington, DC 20239
FOR IMMEDIATE RELEASE
April 11, 1996
Contact: Peter Hollenbach
(202) 219-3302
TREASURY CALLS 8 PERCENT BONDS OF 1996-01
The Treasury today announced the call for redemption at par on August 15, 1996, of the 8%
Treasury Bonds of 1996-01, dated August 16, 1976, due August 15,2001 (CUSIP No. 912810
BW 7). There are $1,485 million of these bonds now outstanding, of which $728 million are
held by private investors. Securities not redeemed on August 15, 1996, will cease to earn
interest.
These bonds are being called to reduce the cost of financing the public debt. The Treasury
plans to refinance the call of the $728 million that is held by private investors through
additions to regularly scheduled securities over the next several months. We estimate that
the budget outlay savings from the call will be about $55 - $65 million.
Payment will be made automatically by the Treasury for bonds in book-entry form, whether
held on the books of the Federal Reserve Banks or in TREASURY DIRECT accounts.
Bonds held in coupon or registered form should be presented for redemption through a
financial institution, or to a Federal Reserve Bank or Branch, or to the Bureau of the Public
Debt, Washington, D. C.
000
(RR-IOOO)
PA-217
NEWS
TREASURY
OFFICE OF PUBliC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASIllNGTON, D.C. - 20220 - (202) 622·2960
Remarks by
Lawrence H. Summ@rA
Deputy Secretary of the Treasury
at the Donors' Conference for Bosnia and Herzp-govina
AP~il
13, 1990
Brussels
For the past year, all of us .l.!. Lllt::: C2.ltlton Admin1s:ra"Cion
tirele5s1y to bring pea.(.~ lu Bu::mia. Ron Brown' 5
tr:.gic trip to the region was PQ.;:;t (;:( Llldl t=£Lun. Ron Brown' S
vicion of .::t pC<lccful and prosperous Bosnia J.iu lluL die with
Ron Brown. tole .::trc herc today to carryon this illtt!U1. Ld.llL work.
h.::tvc worked
The Dayton peace agreement h.::t~ ~toppcd the war in Bosnia
a
war that saw some one-quarter 0:: :l million people killed and
~~rnrities on a scale not seen in Europe for h.::tlf 0 century.
But'. t.hl'" f'~;=l('e is by no means a.ssured.
Dayto:l Yl.::t!:i but one
giant st~p rinwn ~ l.ong road. This donors' conference ia
another essentinl st~r toward a lasting peace. For the
armaments ot war tn h~ l~id p4rmanently to rest. Bocni~'8
people must reap a peac~ riiviripna
While reconstructing
Bosnia's economy 15 not suttjr.1r>nt rn g'lJRrCl:1tee the peace, it
d.lrnost certainly is necessary it peacp. ;>:: in h~ pre~erved.
The WULIJ Bank's excellent report. for these meetlng~
highlight'" Lllt::: bt:"t=!e economiC and human call Ot thlS
W.:'Ir:
o
Per capita inC0dlC ill Bu::;uid is one-quarter of its pre-war
levels and inciustri~l P1Uuuclion less than lO~.
o
Bosnia's infr~struc~ure has been damaged to d Jt:~ree we
have not seen si:J.c~ \-/orlo ;'lQr II. Roughl Y 7 S \ uf t 1Ie
Fpnprrlti~n's
requl:re
~nmp
people are unemployed
h1JmriT"! it arian aid.
~nd 80~
of
~he
peoFle
RR-lO02
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Tllree
'muat be demobili~ed il~
There are one million ~efugees spread
~hroughout Euro~p.,
widows and orphans have becn left
behind. desperateJy n~pding support for basic curvivwl.
some ~hree million mlnp.~ npp.d to be removed and
destroyed.
o
hunnTPd thounnd soldiers
~he com~ng month~.
Tlu:::;I1l;: are but. a tew of the enormous C:Milf1!ngpF; we face. Only
tluuu.yh a concert.ed 1nterna.t.ional ettort by p.vp.ryho(iy ar..,una
thio LcWlt:: will we succeed. 'J.'hat is why this c:onf"iI!Tj:lTlr."P. is so
cl,-iticetl d.l1\.1 l.hat is why the scakes are 50 high tod.ay"
I want co challk. the
Wolfensohn and Hilinil
of t.oday's conference, Jim
ix'oek. The world !:lank merit.s
~v-t.:l~irs
"4U u.tW
special pl"aise for t.he eueJ.yy GUu. vl~iou it has brought La
tackling Dosn1a's reconstruction. Tht! $5.1 lJ~llion, threeYCilr reconst.rucCion plan provide~ the .i.llLeLlJ.ctLloiii:ll communit.v
with ;In ::1greed blueprint fer reconstl."uction and t~ruLIIL By
lic~ing the key rcconatruction projects acr05S vital ~c~LULb
of the economy
cuch ~3 ;lgriculture. industry, and
transportation -- we in the donor community see clearly what
must be done.
The United States will do its part to cupport
Booni~'~
rp.ccnstruction,
Presidenc Clinton has stated repe3~edly that
thj:l ilTlitp.r.l Stat~s' contribution to Bosn.ia's economic
reC':(")n~t'rllr.ti 0"1 wr'l1lJ,; b~ $600 million over several years, On
March 29.
mnnp. gnnn on this claim -- Congress approved a
SUpplemental S198 mi.ll inn p::lr.k:=!!J'" for Sosnia,
My
WP.
cou~try's
1~96
t.ot.al contrlDutlon to
1s $550 million.
Alld
coday,
C':;vil,~n ;mpl~m~ntation ~n
we are
cont.rj hll;. i ng
$219 million in new commitoent5_
Th.i.li; $219 m.i.llll.lH ~l~dqe i:lcl\ldes $14B million for economic
re:.:onst:nlct.i.oH «w.l Ll:vl.!.olization. It also 1nc:'udes
poli.::e l...l.4..i.U.iH~ dud monitors, wh1ch are
to build BOSl'lia' s in~:...i.LuLiuLl::01 $8" 5 million for
dcmining activities. and 312.!j milliCll'l. fCl" CIIlC.L':jt::Ht.:}' l::511t::li..Il;:J:·
~::;o
million for
es~ential
rep:l.l.r.
J
This pledge is in I'.1ddit..i.uJl to the $b~.·' mlll i on we announced
at the mini -donors conferew.:e here in I::!russel ~ 1 ast December
Mcreover, the United State~ .i.~ making subStantlal
~ontributions for humanita:t:icuJ. aid, peacekeeping, ~ 11"('1: ions,
;Inti other activitico needed to illlylement civilian asp~r.t"$ ~f
thp Dayton Accorde.
This !=mhstantial contribution under5COl:c:; Lilt: seriousness witt
which r hp United States views today 5 confer l:lH.:e. Last
I
uecemb~Y. w~ urged donors not to let our effoLL~ yet bogged
down in ouropn- sharing. but r~thcr to do the maxilllulII possible.
as quickly a~ po~sible. This total U.£. commitment of
$281."/ mil1ion for 19% for Bosnia' Ci reconstruction allu
related purposes Tp.pres~nts my country'Q vcry be~t ef£orL~.
I
urge all of my collp..:igllI?S 2\round the table to join u.s in
making the mOSt generou~ r'l)ntributions possible.
~;;:Jid.
Bosnia bea.re importo.nt
nf ~ivilian implemant3tion_
Both LlJe Federation and the Repub.l i Kri Srpska. must comply fully
with all Q~~ects of ~he Dayton Acco~n. Th~y must both build
Ab P,dme Minister Muratovic Ms::
L~~~Qnsibili~ies
for the
succe~~
basic 9UveLUIllf::ntal institutions and st'_'I'"llr.tllYes.
They must
both undel:t.;.k.t::! rHi:trket-orlem:ed reforms tn ,:;hpo the socialist
le9'~ey.
They Illu~Ll.loth continue to do their pi=l'l'"t tn
supporting the
One
cpcci~l
~ea~~ ~Locess,
challenge in thib
l.l;~pect
is for the
~osnia~
Pederation to become a unified eC(murn.i.c..: entity. Cus(oms and
ta.x revenuec mu~t be collected by Lht:: F~deration. A oudget
law must be implemented. These are tlu: k.i.nUs of essential
steps that m1.,;.st be tukcn to attract lal·ljc-o\,;d.le condiLional
suppcrt. The most urgent step is for Eosni.s Lu secure 1M?'
fin~n~ing.
:n turn, thi~ would allow us to addLl:~~ Bosnia'S
inht=!ri tpn r:\f?bts. we welcome the progress that has lJet::Hl Illi:lde
Sl.nce th~ M;:jrr:-h 30th Federation agreement and we urge: tl.ld.L
chis progres~ hI" ~Il<;:t:ained.
Also, ~e as donors can~nr h~ ~cmplacent.
proqress. but: t:here
15
mu(":h
mr'lr'P.'
There ~rc signs of
that urgently needc; to be
J.VIl~.
o
Fj,.u~L, donors must move more quir.kly tQ establish and
enlarge lb~.L! presence on-che-ground ir:C:;.:!r;ljevo. This
requi::es sreoL<::~ .Ll"Lernat:i.onal manpower.
o
~econa.
'mplpmen~a~ion
0=
recon3truction
~4~purt
must be
accelerated.
'T'oday's conference will ensu.:::e i...hd.1.. c:.he
project plpelln~ T~mains full. hll of us want vUL
p:-ojects to .oe
~~lIr'1illy prepared becau:::;c we hc.ve
reSponsibi:lc::es rn rm-r ta.xpayers. But if we Core to Le
successful ~n :"nvesr.,ng the parties in peOlCC during tnl.S
critical IFOK year. we n~pn also to translate these
~C)ll1mit:ment:s
o
The
rapidly
~nto di~hl.lrsements.
Th.i.!.u, ::sectoral task forces havE'! hf;'t:'n established for the
ten ::s~\,;L.Qr5 under the Hank's progr;;m. Donors should
dedicate Lhe.i1- funds to t.he completit"m of thoe sectoral
programs ideuL.i.f..i.ed by the Bank: a:ld Bosnj~. ~1'lt:1 full
coordination shvulJ LClk.e place in t.he sector t:~!=;k farces_
I am plea:;cd to annv\,l.ll~<::: t'SA!D has offered to lean t"hp
t~3k force on indust:::-y 411U .indust.rial finance.
The
qu~lity of our ~upport i6 ev~~y bit as 1mpor~ant. as tn~
quantity of our support.
next
~fforts
few month::; are critical. We 11eeU Lo redouble our
on all aspecto of civilian implemel1Ld.L.i.(.m so t:hat
begin to reap the peace diVidend; so t.Ld.L :..hey can
!Hlr1 productive job opportunitic3, especially to. t.l!c
c1emoh,li7'pn sC'ldigrs; and so that they can see tr:ey ho-ve 1Il(,)!.~
to gain fTnm p~~e~ than war .
R(")~nians
Wi1"1ston Churchill. we are not ilt. the end, not
the begin1"1i1"1g ~f th~ end, but perh~PG with this donurs
conference we are n?~ring the end of the beginning of our
effor~s t.o help rebu~ld Kn~r'li~_
It is. however, ~ critical
~~~p ~o build momentum tor ~~~1"1i~'s recovery and to encoura,gG
all Lh~ people of Bosnia to per:o;'~t (")1"1 the path of pea.ce. Let
me a$SUL~ yUU tha~ t.he Clinton Aaml~:~ir~iinn. working hand ir.
hand with Bu:m.i." and t.t.e international cnlTlm\!r'I' ty. is fully
committed tc du.i1i.l~ ii...~ ut.most on economic recom;:-:-rllr-t i",n.
W9
.l.'0 paraphr~~p
even
a~
Olrc here fer the 10119 h:l.ul.
Thank you.
April 13, 199G
FACT SHEEr ON U.S, ASS1STANCE TO lH ..·.
~F.COvERy
OF BOSNIA AND
HERZEGOVENI A
U.S. contributions dli:; y~o:U for all civilian implementation 1n \iosnia will reach USD
550 million. As part of that package:, lilt: United States today announced the'" commitment of
an 9.ddition~l usn 219 million dollars tu support Bosnia's recovery. This I'led2~, announced
by Treasury Deputy Secretary Lav,TtIlCt SWIIlIlc;r~. U.S. delegation head at the knt~~ls
Donors Conference, is in D.ddition to the USD (j2.7 milliun for economic reconstruction
pledged by the United Sttltes IMt December.
The new USD 219 million U.S. contribution anl10Ullccd lulla\' includes USD 14S
million for economic reconstruction nnd revitalization, USD 12.5 million for emergency
!>hE'!lter repair, and USD 8.5 million for demining. An additional USD 50 million is identified
fOT po licp. tT(lining and police monitors, essential ingredients in rebuilding BuslIil;l's
institutions and f1l1nli~ confidence. Of the USD 281.7 million program described bdu . . . ,
approximately USD lllll million is economic reconstruction assi5t£ulcc targeted against
President Clinton's pJedge of !.lSD 600 in economic reconstruction assi3tance for Dosnia OVe.
the next few years. Substantial contributions also have been made this yenr by the United
Slales for humanitarian assistance, pe;tr.p.keeping, elections, and other civilian aspcets of the
Dl:lywn Accords.
BREAKDOWN OF D,S. fLF.DO.E.S;.
EWUUUli~ Revitalization
DmergetlCJ Shc:1Lcr Repair
Demining
Police Tra.ining and Muuilors
Total New' ComwitluC:lIl~
Previously pledged at D~,cmber's Confcn::l1l,;c
TOTAl. l'1~flII.S. FUNDING FOR BOSNIA'S RECOVERY
AND ECONOMH: w. ..·.VlTALlZATION:
S14g.0 million
'ti 12.5 million
$ X '; million
$ )(LlI mlilion
$119.0 million
$ 62.1 million
$281.7 million
FACT SIffiET ON TOTAL U.S ASSISTANCE TO CIyILtAN IbrIPLEMENT ~
PROGBAMS IN BOSNIA ANI) HERZEGQVENlA FOR FY '26
•
New economic ICWllSttu~tion pledge announce.d
April 13, 1996
$219.0 million
FY '96 funds for Bosnia a;oD01Dic reconstruction and
e.conomic and democratic reform~ pl4Kiged for first
tiSC'.al quarter in December Donor's Cunference
S 62.7 milljon
+
$1 4~.3
+
million
FY '96 u.s. ("A'ntribution to intemntional support
for Bosnian eleetions, police monitors. peacekeeping
and war crimes trihllna1
$) 19.0rnillt"n
FY '96 TOTAL U.S CMLIAN ASSISTANCE TO BOSNIA;
5550.0 milli.oJl
D EPA R,T MEN T
0 F
THE
T REA SUR Y
TREASURY,
OFFICE OF PUBUCAFFAIRS .1500 PENNSYLVANIA AVENUE, N.W.. WASHINGTON, D.C.. 20220. (202) 622-2960
Remarks as prepared for delivery
April 12, 1996
DEAD WEIGHT AND A DISTANT SHORE
Remarks of Richard S. Carnell
Assistant Secretary of the Treasury
for Financial Institutions
The Jerome Levy Economics Institute
Annandale-on-Hudson, New York
On the last day of 1896, a journalist embarked on a rogue steamship smuggling
ammunition from the United States to Cuba. He had won fame recounting the American
Civil War. Now he sought to witness Cuba's struggle for independence. But the ship sank,
and the journalist drifted for days in a small open boat through the jagged, wintry waves of
the Atlantic. As the boat neared the Florida coast, breakers swamped it, tossing the
journalist into the sea. Cold, exhausted, gripped by an undertow, he contemplated his own
death as a welcome relief. Here's how he described what happened next:
"Presently he saw a man running along the shore. He was undressing with most
remarkable speed. Coat, trousers, shirt, everything flew magically off him.
"Then he saw the man ... come bounding into the water. ... He was naked,
naked as a tree in winter, but a halo was about his head, and he shone like a saint.
He gave a strong pull, and a long drag, and a bully heave at the correspondent's
hand. The correspondent, schooled in the minor formulae, said: 'Thanks, old man.'"
The shipwrecked journalist was Stephen Crane, author of The Red Badge of Courage.
He described the rescue in a short story entitled "The Open Boat." And, as it happens, the
rescuer shedding what he knew would be the dead weight of his clothing was my great-greatgrandfather, John Kitchel.
RR-I003
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2
Now I'm not planning to talk about any financial shipwrecks here. Our financial
system is healthy -- healthier than it's been for many years. But this ancestral disrobing
provides a metaphor for current efforts to shed the dead-weight encumbrance of outmoded,
overly restrictive laws like the Glass-Steagall Act and the Bank Holding Company Act.
Strengths of Our Financial System
I'd like to begin by talking about the strengths of our nation's financial system. Let
me name six of those strengths, and put them in a global perspective.
First, we have the broadest, deepest capital markets in the world -- capable of
financing innovation and growth at relatively low cost.
Second, our financial workforce is highly skilled, from the backroom to the
boardroom. It's a tremendous, and often under-appreciated, resource.
Third, our financial institutions and financial markets are highly competitive and
responsive to customers' needs.
Fourth, our nation's consumers are knowledgeable and demanding.
Fifth, our system has, to a great degree, democratized credit. Most people in this
country have access to some form of credit. Credit is not, as it once was, the preserve of
the affluent. That's not to say the system works perfectly. It doesn't. But compared to
many other countries or to this country a century ago, consumers in the United States
generally have very good access to credit.
And sixth, our financial system is remarkably innovative and adaptable. (Of course,
given our, legal and regulatory structure, it has to be.) Americans remain the Thomas
Edisons, the Henry Fords, even the Michelangelos of the financial world.
Outmoded and Overly Restrictive Bank Structure Laws
Against the backdrop of these strengths, our financial system does have some very
real shortcomings. One of the more conspicuous shortcomings is a set of outmoded and
overly restrictive bank structure laws, notably the Glass-Steagall Act and the Bank Holding
Company Act. As I will contend, these laws dampen innovation and impose needless costs -costs not necessary for safety and soundness or anything else worth having.
Now that's a bit ironic because, as I've indicated, innovation and adaptability are
hallmarks of our financial services sector. Naturally, financial institutions put this same
ingenuity to work inventing their way around, or flourishing in spite of, outmoded legal
constraints. As Adam Smith noted 220 years ago:
3
"The unifonn, constant, and uninterrupted effort of every man to better his condition,
the principle from which public and national, as well as private opulence is originally
derived, is frequently powerful enough to maintain the natural progress of things
toward improvement, in spite both of the extravagance of government, and of the
greatest errors of administration. "
But spending time devising ways to circumvent Glass-Steagall and the Bank Holding
Company Act diverts resources that financial institutions could more productively employ
elsewhere. It's the financial services equivalent of swimming in the Atlantic fully clothed.
Expertise in circumventing laws and regulations has much more limited utility than
other financial innovation. If you develop electronic money or home-banking software, you
could potentially market some variation of it worldwide. But you'd sure have trouble
exporting Glass-Steagall avoidance techniques, or the latest strategies for coping with
Regulation Y. Since other countries don't inflict the same constraints on themselves, they
have little use for these innovations.
The fact that our bank structure laws are out of date is not for lack of trying. And
we can take satisfaction that in 1994, the Riegle-Neal Interstate Banking and Branching
Efficiency Act largely resolved a debate over geographic restrictions on banking that went
back more than a century -- perhaps the longest-running battle in American banking law.
Forces Transforming Our Financial System
Nonetheless, even after decades of debate, our bank structure laws still fail to provide
the structural flexibility needed to maintain efficient production and satisfy customer
convenience. This failure becomes all the more glaringly apparent when we consider the
profound changes now occurring in our financial system.
The financial services industry looks very different today than it did a decade ago
because of some very powerful forces beyond its control. I want to talk about three forces in
particular: technological innovation, financial innovation, and globalization. That's hardly
an exhaustive list, but it illustrates some of the key issues. Let me walk through them with
you.
Technological Innovation
The first -- and perhaps most significant -- force for change is technological
innovation. It has a remarkably broad reach. Technology has connected global markets,
driven down the cost of backroom operations, brought us ATMs. It's at the forefront of
electronic money and electronic banking. And technology may well be creating economies
of scale and scope that could drive consolidation within the financial services industry for
many years to come.
4
Much of the technological revolution has centered on information technology. We
can process and communicate infonnation more quickly and cheaply than ever before. And
that brings us closer to the frictionless capitalism described by Microsoft Chairman Bill
Gates, in which increasingly well-developed electronic markets link buyers and sellers
directly.
This information revolution has profound implications for financial services. Think of
how bank lending originated. People with money to lend often couldn't assess the credit of
people who needed to borrow. But they knew the bank's credit -- represented by its
reputation for meeting all its obligations. Moreover, the bank, as holder of its customers'
deposits, enjoyed unique access to information on potential borrowers' financial condition.
That informational advantage was its stock in trade.
What does it mean for banking, then, if information and communication improve to
the point that investors, and borrowers, and other participants in financial markets can link
up with one another much more readily than in the past? Of course, that's exactly what
happened with large corporations' commercial borrowing. Corporations turned from
commercial loans to commercial paper. But it does appear that this process -- this
disintermediation -- will spread into new areas. If market participants can communicate
directly with one another, share information, buy, and sell almost effortlessly in a virtual
marketplace, then we have to expect that the pace of disintermediation will accelerate. As
former Citicorp Chairman Walter Wriston noted a decade ago:
"The technology that creates, transmits and stores the almost unlimited and constant
flow of data will neither abate, slow down, nor stop.
"If we in the banking business are to do anything but try to protect old turf
and hold on to yesterday a little longer, we have to address the real issue of
operations in a changed world. The real issue is that the information society is
robbing us of our comparative advantage and we have to find new products and new
customers to survive over time. "
Financial Innovation
Technological innovation has also played an important role in facilitating financial
innovation, a second major force for change. Let ne use one example. Thirty years ago,
Americans couldn't legally own monetary gold. Today, they can buy CMOs, MBSs. floating
rate bonds, interest-only and principal-only strips, financial futures, options on indexes,
knock-out call options, caps, floors, collars, income warrants, dual currency bonds,
commodity-linked bonds, yield-curve notes, interest-rate swaps, currency swaps, equity
swaps, floor-ceiling swaps, ratio swaps, spread locks, wedding bands, swaptions, and, yes,
even a Libor-squared turbo swap.
5
It's a dizzying array of financial products. And some recent episodes make clear that
those who use them don't always understand what they're doing. But these seemingly exotic
instruments, properly used, play an important and legitimate role in managing risk.
Financial innovation has meant lower costs, greater flexibility for users, increased liquidity,
and better risk allocation. Yet the complexity of many of these financial products has
perplexed regulators. For example, are institutions using those products to hedge existing
risks or to create new exposures? Often it's hard to say. This presents enonnous challenges
for regulators and has contributed to the federal banking agencies' decision to orient
examinations more toward assessing banks' systems and procedures for managing risk and
less toward detailed analysis of current portfolios (which can, after all, change very rapidly).
Globalization
Globalization is a third force transforming our financial system. As in every other
line of commerce, global financial competition promises enormous benefits for consumers in
the fonn of better, more varied, and less expensive services. Financial markets are
increasingly integrated, with large volumes and ranges of financial instruments being traded
across borders. Finns today can "pass the book" and engage in 24 hour trading in markets
around the globe. Large multinational offerings of stock are commonplace and mutual funds
have strong international components as investors chase the higher returns of riskier
emerging markets or seek to invest in equities on the London or Tokyo exchanges. In some
recent years, foreign institutions supplied 30 percent or more of the dollar amount of
commercial and industrial loans to U.S. borrowers.
Of course, this increased globalization carries with it many risks, as well as many
opportunities. Today financial services increasingly operate in an enormous, unpredictable
market. As financial markets become even more integrated, and even more globalized,
numerous questions arise: Could new challenges to systemic stability arise? What is an
appropriate regulatory scheme? How should home countries and host countries allocate
responsibility for various supervisory functions, including the lender of last resort for
domestic offices of foreign institutions? We must think through these and other issues very
carefully.
Some Implications
These changes have dramatic implications for our financial system, and I'd like to
touch on several of them.
Disintermediation is virtually certain to continue, reducing the role of traditional
financial intermediation and increasing the role of informational intermediation. In short,
knowledge is power, and those who deal in information -- for example, non-financial firms
such as developers of computer software -- will be important participants.
6
The convergence of different types of financial services and financial institutions will
continue, thereby undercutting the existing regulatory structure.
This still leaves us with a specific problem: Markets have changed, and customers'
needs have changed, but financial intermediaries remain constrained by antiquated laws
designed for different circumstances. Of course, this has led to calls for financial
modernization -- which in Washington is often equated with repeal of the Glass-Steagall Act.
In Glass-Steagall we have an easily identifiable target -- the separation of commercial
and investment banking. And we want to remedy the problem.
But we still need to ask the following question: Is Glass-Steagall reform what we
need for the next century? Is it responsive to the changes that have occurred, and continue
to occur, in the financial services industry? You can answer that question in two ways.
The first answer is: Yes. Glass-Steagall repeal is a necessary, long overdue part of
financial modernization. Glass-Steagall is an artificial constraint, imposed under dramatically
different circumstances, that raises financial institutions' operating costs. These increased
costs are not justified by the Act's contributions to safety and soundness -- a conclusion
supported by a long and growing list of empirical studies over the past two decades. Despite
the old conventional wisdom to the contrary, the evidence does not indicate that securities
activities contributed to the banking collapse of the 1930s. Nor does the evidence indicate
that we need to segregate such activities in a holding company subsidiary to protect banks
from the risks of those activities. Maybe some day, when you peruse an economics textbook
on CD ROM, you might just click on the words "misallocated resources" and get pictures of
Carter Glass and Henry Steagall.
The second answer is that Glass-Steagall refonn as currently proposed -- accompanied
by scores of statutory pages specifying how to conduct the activities and prescribing a
cumbersome structure for organizations that choose to offer them -- is a short-term fix that
represents only a marginal improvement over what a decade or two of regulatory and legal
rulings have already put in place.
Looking ahead, what we really need is a regulatory and legal structure that will bring
us into the 21st century -- a structure that will support the institutions and products that
comprise the future financial services industry in such a way as to promote efficiency,
stability, and equity. Globalization and disintermediation are realities. But is the regulatory
and legal system equipped to meet their challenges?
I can't tell you what the financial services industry of the next century will look like.
I don't have a crystal ball. But I can tell you that it must, by and large, be shaped by the
market -- not the government. Certainly, the government will continue to address such
issues as safety and soundness, systemic stability, and access. But the government also needs
to create a legal and regulatory structure that enhances free-market competition.
7
Financial modernization in that respect is an issue for the long-term, but we should be
addressing it right now. If we wait too long, we run the risk of falling behind our
competitors around the globe, who operate in the same global marketplace but without the
same restrictions.
My concern is that the bill currently pending in the House would have the effect of
locking the financial services industry into the 1980s or early 1990s. This bill provides some
nice irony. It's being advanced in the name of modernizing our financial system. Yet its
very premise is an archaic segregation of financial services. It segregates deposit-taking
from securities activities, and reinforces the separation of banking and insurance. This flies
in the face of serious research on the subject and the direction taken by virtually all other
major industrial countries, both of which suggest the desirability of allowing such
combinations to facilitate integrated risk management or to achieve potential economies of
scope.
Yes, let's modernize our financial system. But let's not do it in a half-hearted way
that would actually impede future change. The cost of taking a few steps forward should not
be having our feet nailed to the floor. Let's shed the dead weight and move on.
-30-
UBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
FOR IMMEDIATE RELEASE
April 1S, 1996
CONTACT: Office of Financing
202-219-3350
RESULTS OF TREASURY'S AUCTION OF I3-WEEK BILLS
Tenders for $10,506 million of 13-week bills to be issued
April 18, 1996 and to mature July 18, 1996 were
accepted today (CUSIP: 9127943AO).
RANGE OF ACCEPTED
COMPETITIVE BIDS:
Low
High
Average
Discount
Rate
4.85%
4.87%
4.87%
Investment
Rate
4.98%
5.00%
5.00%
Price
98.774
98.769
98.769
Tenders at the high discount rate were allotted 97%.
The investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
TOTALS
Type
Competitive
Noncompetitive
Subtotal, Public
Federal Reserve
Foreign Official
Institutions
TOTALS
4.86 -- 98.772
RR-I004
Received
$51,200,101
Accepted
$10,506,275
$45,79.8,009
1. 510,232
$47,308,241
$5,104,183
1. 510,232
$6,614,415
3,671,860
3,671,860
220,000
$51,200,101
220,000
$10,506,275
UBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
FOR IMMEDIATE RELEASE
April 15, 1996
CONTACT: Office of Financing
202-219-3350
RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
Tenders for $10,544 million of 26-week bills to be issued
April 18, 1996 and to mature October 17, 1996 were
accepted today (CUSIP: 912794Z98).
RANGE OF ACCEPTED
COMPETITIVE BIDS:
Low
High
Average
Discount
Rate
5.02%
5.03%
5.03%
Investment
Rate
5.22%
5.23%
5.23%
Price
97.462
97.457
97.457
$3,900,000 was accepted at lower yields.
Tenders at the high discount rate were allotted 12%.
The investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
TOTALS
Type
Competitive
Noncompetitive
Subtotal, Public
Federal Reserve
Foreign Official
Institutions
TOTALS
4.86 - 97.543
RR-I005
Received
$44,681,670
Accepted
$10,543,843
$38,104,280
1. 204,790
$39,309·,070
$3,966,453
1,204,790
$5,171,243
3,500,000
3,500,000
1. 872,600
$44,681,670
1. 872,600
$10,543,843
4.96 - 97.482
DEPARTMENT OF THE TREASURY
WASHINGTON, D.C.
SECRETARY OF THE TREASURY
April 15, 1996
The Honorable Newt Gingrich
Speaker
U.S. House of Representatives
Washington, D. C. 20515
Dear Mr. Speaker:
The President is committed to balancing the budget, providing real tax cuts to middle income
families and small businesses, and maintaining our investments in education, training. and
protl!cting our nation's retirement security systems.
At the same time, our Administration strongly opposes H.I. Res. 159. as amended by the
text of H.J. Res. 169. A Constitutional Amendment requiring a two-thirds vote in both
Houses of Congress to "increase the internal revenue" is bad public policy. A democratic
majority rule is clearly preferable to rule by a minority in determining the direction of the
nation'S fiscal policy.
H.J. Res. 159 would make it more difficult to correct, as well as to reform, the tax laws.
The amendment would make it harder to close special interest tax loopholes. Under the
proposed amendment, new tax loopholes could be enacted with a simple majority, but it
would require a two-thirds vote by Congress to eliminate them.
In addition, the amendment would make it difficult to enact necessary legislation to maintain
essential services that are in the nation's best interest. For example, the amendment would
require a two-thirds majority In order to reinstate funding for the Airport and Airways Trust
Fund.
Enforcement of the proposed amendment would also raise a number of serious problems. If
the proposed amendment is read to authorize judicial enforcement, courts would be drawn
into fundamental policy and political disputes better resolved by elected officials. In
contrast, if judicial enforcement is unavailable, those who would seek to invoke the
amendment would be left without a remedy, and the public's confidence in the authoritative
force of the Constitution would be undermined. The difficulty in enforcing the proposed
amendment would be heightened by the ambiguity of many of its pivotal proVisions, such as
the exception for "de minimis" increases to the internal revenue and the scope of the phrase
"internal revenue laws."
We urge that Congress not pass this proposal to amend the Constitution of the United States.
Sincerely,
Robert E. Rubin
cc:
The
The
The
The
Honorable
Honorable
Honorable
Honorable
Bill Archer
Sam Gibbons
Henry Hyde
John Conyers
VI
DEPARTMENT OF THE TREASURY
WASHINGTON, D.C.
SECRETARY OF THE TREASURY
April 15, 1996
The Honorable Richard A. Gephardt
Democratic Leader
U.S. House of Representatives
Washington, D. C. 20515
Dear Mr. Leader:
The President is committed to balancing the budget, providing real tax cuts to middle income
families and small businesses. and maIntaining our investments in education, training, and
protecting our nation's retIrement security systems.
At the same time, our AdrllInIstration strongly opposes H.J. Res. 159, as amended by the
text of H.1. Res. 169. A ConstItutional Amendment requiring a two-thirds vote in both
Houses of Congress to "increase the internal revenue" is bad public policy. A democratic
majority rule is clearly preferable to rule by a minority in determining the direction of the
nation's fiscal policy.
H.1. Res. 159 would make it more difficult to correct, as well as to reform, the tax laws.
The amendment would make it harder to close special interest tax loopholes. Under the
proposed amendment, new tax loopholes could be enacted with a simple majority, but it
would require a two-thirds vote by Congress to eliminate them.
In addition, the amendment would make it difficult to enact necessary legislation to maintain
essential services that are in the nation's best interest. For example, the amendment would
require a two-thirds majority in order to reinstate funding for the Airport and Airways Trust
Fund.
Enforcement of the proposed amendment would also raise a number of serious problems. If
the proposed amendment is read to authorize judicial enforcement, courts would be drawn
into fundamental policy and political disputes better resolved by elected officials. In
contrast, if judicial enforcement IS unavailable, those who would seek to invoke the
amendment would be left without a remedy, and the public's confidence in the authoritative
force of the Constitution would be undermined. The difficulty in enforcing the proposed
amendment would be heightened hy the ambiguity of many of its pivotal provisions, such as
the exception for "de minimis" increases to the internal revenue and the scope of the phrase
"internal revenue laws."
We urge that Congress not pass this proposal to amend the Constitution of the United States.
Sincerely,
Robert E. Rubin
cc:
The
The
The
The
Honorable
Honorable
Honorable
Honorable
Bill Archer
Sam Gibbons
Henry Hyde
John Conyers
DEPARTMENT OF THE TREASURY
WASHINGTON, D.C.
SECRETAR~ OF' THE TREASURY
April 15, 1996
The Honorable Richard Armey
Majority Le.ader
U.S. House of Representatives
Washington, D. C. 20515
Dear Mr. Leader:
The President is committe{! to balancing the budget, providing real taX cuts to middle income
families and small businesses. and maintaining our investments in education. training, and
prott!cting our nation's relireml!nt security systems.
At the same time, our Administration strongly opposes H.J. Res. 159, as amended by the
text of H.J. Res. 169. A Constitutional Amendment requiring a two-thirds vote in both
Houses of Congress to "increase the internal revenue" is bad public policy. A democratic
majority rule is clearly preferable to rule by a minority in determining the direction of the
nation's fiscal policy.
H.J. Res. 159 would make it more difficult to correct, as well as to reform, the tax laws.
The amendment would make it harder to close special interest tax loopholes. Under the
proposed amendment. new tax loopholes could be enacted with a simple majority, but it
would require a two-thirds vote by Congress to eliminate them.
In addition, the amendment would make it difficult to enact necessary legislation to maintain
essential services that are in the nation's best interest. For example, the amendment would
require a two-thirds majority in order to reinstate funding for the Airport and Airways Trust
Fund.
Enforcement of the proposed amendment would also raise a number of serious problems. If
the proposed amendment is read to authorize judicial enforcement, courts would be drawn
into fundamental policy and political disputes better resolved by elected officials. In
contrast, if judicial enforcement is unavailable, those who would seek to invoke the
amendment would be left without a remedy, and the public's confidence in the authoritative
force of the Constitution would be undermined. The difficulty in enforcing the proposed
amendment would be heightened by the ambiguity of many of its pivotal provisions, such as
the exception for "de minimis" increases to the internal revenue and the scope of the phrase
"internal revenue laws."
We urge that Congress not pass this proposal to amend the Constitution of the United States.
Sincerely,
Robert E. Rubin
cc:
The
The
The
The
Honorable
Honorable
Honorable
Honorable
Bill Archer
Sam Gibbons
Henry Hyde
John Conyers
TREASURY
NEWS
OFFICE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220 - (202) 622-2960
TESTIMONY OF GEORGE MUNOZ
ASSISTANT SECRETARY OF THE TREASURY
FOR MANAGEMENT/ CIDEF FINANCIAL OFFICER
HOUSE SUBCOM~ITTEE ON GOVERNMENT MANAGEMENT, INFORMATION
AND TECHNOLOGY
APRIL 16, 1996
RR-I006
Far press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
Computer Challenge
Dateline: 1/01/00
Testimony
by
George Munoz
Assistant Secretary (ManagePlent)
& Chief Financial Officer
Department of the Treasury
Before the
Committee on Government Reform
and Oversight
Subcommittee on Government
Management, Information and Technology
u.s. House of Representatives
April 16, 1996
Introduction
Representative Horn, distinguished members of the Committee, ladies and gentlemen.
On behalf of the Department of the Treasury and Secretary Rubin, I want to thank you
for the opportunity to speak with you about the Year 2000 Date Transition, more
commonly known now as the Y2K problem.
I want to commend Representative Horn and this Committee for taking the leadership
to bring this important issue before Congress. AE you have heard from the other
witnesses in this hearing, it is essential that the Federal government begin defining the
government solution for the century date change and, by drawing attention to it at this
level, much needed resources can be focused on that process.
I would also like to applaud OMB for having taken the initiative to sponsor the
Interagency Committee work that has recently begun. GSA and NIST are also to be
commended for their part in developing recommended guidelines and standards.
Credit is also due to those agencies like Social Security and Department of Defense
which have demonstrated foresight in initiating projects within their own departments. I
also want to recognize the Financial Systems Committee of the Chief Financial Officers
Council (CFO) for their leadership in this effort. In addition, I would like to thank the
Treasury Office of Security and the Office of Information Systems as well as our bureau
information technology officers for having identified this issue and coordinated our
response.
I plan to present here not only the position of Treasury, but, as Executive Vice Chair of
the Chief Financial Officers Council, my comments will reflect information gathered
from several state governments, Federal agencies, and the CFO Council's Financial
Systems Committee.
My comments today will briefly address the three main components of the Year 2000
Date Transition:
o
The reality and severity of the problem;
o
The additional risks in the Federal environment and how we in Treasury
are addressing the problem; and
o
Finally, lessons learned, opportunities, and recommendations for
successfully moving into the 21st Century.
1
Severity of the Problem
A description of the problem here may be repetitive of what my colleagues have
presented, but I would like to define the issue from the financial perspective. Clearly, if
a solution were delayed, we would be courting disaster and may be facing chaos. That
would not happen.
When I use the term "problem," I am referring to the challenges that I and many other
managers have to assure that key systems will process smoothly into the next century. It
is a challenge whicb we will meet. I am confident that systems in the Treasury
Department and other agencies will work on January 1,2000. As others have said, the
challenge comes from the inability of some computer systems to process dates after 1999
accurately.
It is not a problem that is limited to either the Federal government or other public
sector information systems. It is widespread throughout the public and private sector
information systems, systems that impact our lives daily. It involves deeply embedded
manipulations that have the potential to affect almost all automated systems, from small,
single user systems, to massive transaction systems.
In reviewing the missions of our agencies, the effect of Federal government computer
processing on the American economy becomes abundantly clear. For example, in the
Treasury Department, we have large, extensively complex systems:
a
Treasury collects $1.4 trillion annually through IRS, Customs and A1F,
representing over 97% of the total Federal revenues. Last year, 250 million
returns were processed.
o
The Treasury Financial Management Service (FMS) oversees a daily cash flow
in excess of $10 billion and issues over 800 million payments totaling over $1
trillion each year for all executive agencies.
o
The Customs Service collects over $20 billion in duties, taxes, and fees. They
assist in the administration and enforcement of some 400 provisions of the law
on behalf of more than 40 government agencies and process 456 million
- persons and 127 million conveyances a year.
o
Public Debt auctions $2 trillion marketable Treasury securities annually. They
issue and redeem 150 million savings bonds annually and they account for the
$4.9 trillion Federal debt and over $300 billion in annual interest charges.
2
I have described these key activities to provide you with a sense of diverse areas of
potential impact and the magnitude of work needed to address these seemingly simple
date problems. It is important to. stress that the business of the Federal government is
intricately interwoven with the commerce and welfare of the rest of this country as well
as other nations. Because of those critical relationships, it is essential that we in the
Federal government address the Year 2000 problem aggressively.
Before I go any further, I think it is important to address a question which naturally
emerges from a cursory examination of this problem: 'Did this problem arise because of
someone's negligence?" To this, we emphatically respond: NO!!! Not many years ago,
computers were not measured in gigabytes and terabytes, but in kilobytes. As is often
quoted these days, people today have computers in their homes that have more storage
space and processing capacity than many mainframes of thirty years ago.
In those days, saving storage space in computer files was critical to the efficient
operation of systems that used very expensive resources. As a result, software was
developed to solve complex technical problems and serve intricate, critical business
needs using only two digits for the year. Many of those systems are still in use, which is
a testimony to their quality but also, to the complexity and cost of migrating these
systems to newer technology. These systems are central to many of our most critical
operational functions-they are at the heart of the Year 2000 problem.
The enormous scope of this conversion effort is only clear when the steps involved
locally within an organization are multiplied across the world-wide enterprise of
information systems. Resolving Year 2000 issues will require extensive examination of
applications, data items, and systems. While the legacy systems are the most likely to
include the two-digit year, we must be sure that all dependencies have been identified
and addressed.
For some Year 2000 compliant systems, complex interfaces will need to be built to
handle data to and from systems that mayor may not be compliant yet. Typical of most
organizations, within the portfolio of Treasury production systems, not all systems will be
updated at one time, requiring complex configuration management as sections of code
are made compliant.
Bridges will have to be built between systems as changes are introduced. Firewalls and
other protections will need to be developed as part of contingency plans to ensure the
success of critical system if interfaces fail. Comprehensive test environments will have to
be built to ensure that applications can successfully process 21st century dates.
Finally, all of this must be accomplished while still operating these systems for critical
production activities.
3
(ri)vemment Environment
As we prepare to address this issue, it is important to recognize the realities of the
environment in which these conversion activities will take place in the Federal
government. Many Federal systems are larger and older, and perform unique tasks so
they are less likely to be included in the Year 2000 upgrades provided by vendors.
Simply put, our challenge is greater than that faced by the private sector.
In additio~ there are some obstacles to resolution of the proble~ which hinder, rather
than support, the technical and project management efforts to move the Federal Sector
forward toward full compliance. Those obstacles include the limitations of the
acquisition cycles, dwindling pool of experienced personnel, application systems unique
to the Federal sector, and a huge inventory of legacy software and hardware. Further, as
opportunities to cut expenditures are sought, the budget environment may limit
aggressive conversion activity in favor of continuing current operations.
Given the size of this effort for the Federal government, sufficient quantities of
competent vendor support seIVices are absolutely essential. There will be fierce
competition for technical contracting seIVices to assist public and private organizations
world-wide with this conversion effort. The longer the Federal government agencies wait
to purchase these seIVices the higher the costs and the more likely all competent sources
will already be fully committed. In this regard, the recently enacted Information
Technology Management Reform Act of 1996 should help immensely to provide
flexibility in acquiring the needed technology and systems.
Personnel issues are another category of Federal government difficulty. Work on this
problem is occurring at the time of downsizing the Federal workforce. We must be
careful as we downsize to maintain the critical expertise we will need to address this
Year 2000 problem.
One of the most significant features of the government environment is the huge
inventory of legacy software. Many times that software is characterized as being
monstrously complex and run on outdated hardware. As can be seen from the attached
chans, the Federal government has large numbers of older mainframe systems which
may be suspect. For many of these legacy systems, the vendors who originally provided
the so~_are are either no longer in business or not upgrading these early versions of
their products. Funds may be required to upgrade or replace that software, in order to.
ensure the continuing operation of systems.
Finally, the testing environment for implementing the solution may require duplicate
resources for a limited period of time. There has never been a time when so much code
was being examined, changed and tested at the same time. Not only will most of the
4
software in each agency be changing, but simultaneously, most of the code in every other
interfacing agency will also be changing. The rigorous testing environments required to
implement such a complex scenario will require careful planning.
Budget cycles for purchasing much needed services, software, and hardware require
extensive multi-year projections and must be submitted months and years in advance. It
may be difficult to finance a conversion effort of this magnitude within existing program
funds.
TreasuIY Year 2000 Initiatives
As I stated earlier, Treasury's systems will not fail at the beginning of the next century.
To ensure that, we have already begun necessary steps to address the Year 2000 issue.
Every bureau within Treasury has made progress towards the Year 2000 solution and
some have made significant progress within their information systems in resolving the
Year 2000 problem.
o The Department has been an active participant in the OMB Interagency Year 2000
Committee since its beginning in December 1995.
o
A Treasury-wide group has been established to highlight the problems, work the
issues, and share lessons learned.
o Milestones have been given to bureau information technology executives which will
provide a vehicle by which the Department can track progress.
o The bureaus are at various levels of progress. Some bureaus have completed one or
more of the following key steps in the Year 2000 conversion process:
used four-digit year fields for many years;
completed conversions for legacy applications;
developed blueprints;
inventoried systems;
evaluated tools; or
identified potential systems at risk ..
o The bureaus have been requested to include estimated Year 2000 costs in the FY
1998 budget submissions.
o Our Chief Financial Officers are aware of the issue and are monitoring the
compliance of fiscal systems across Treasury.
5
Lessons Learned
Turning now to what can be done, I would like to discuss the lessons that have been
learned, the opportunities that we have for making improvements, and how Congress
can proactively address the Year 2000 problem.
There is no one solution for all situations because of the inherent
complexities. Huge legacy systems are full of homegrown routines, adapted for specific
agency requirements, many of which have dates. There is no way a quick fix or new
product can address all of the embedded date usage. The only solution is addressing
each technical problem internally and coordinating the project centrally.
No silver bullet.
Planning is paramount. The temptation to rush in and attack the technical problem is
great, especially with the added pressure of the inflexible deadline. This would be a
huge mistake. Planning is essential because approaching a project of this size must be
done strategically and tactically. Thinking outside the box may give us the chance to
evaluate opportunities to improve business processes and computer processing. Taking
the additional time to plan is imperative and will prevent costly errors later, when there
\\Till be no time to recover.
Good project management is essential The challenge of project management in an effort
of this size is unprecedented in the infonnation systems environment. This is not strictly,
or even primarily, a technical problem. Treasury's financial systems, especially those
related to revenue collection and disbursement of funds, represent the crossroads of
financial activity for the Federal government. Consequently while addressing the Year
2000 issue, Treasury must also ensure that the integrity of all existing financial systems is
maintained during this conversion. We cannot off-load these processes while we make
corrections to them. It is analogous to trying to repair a Boeing 747 while in flight.
Managing all of the components simultaneously while continuing to execute the mission
is absolutely imperative.
More effort than expeded. Planning and testing, which are critical to success in this
effort, are requiring significantly more resources than expected. Neither the government
nor industry has ever attacked a computer systems problem this massive or pervasive.
The brittle nature of the homegrown systems, the monumental coordination with external
agencies,_ ~he heterogeneous existing technical environment all contribute to the
complexity, and therefore to the effort, of this project.
More costly than expected. As the effort was underestimated, so was the cost. Because of
all the elements that must be brought to bear (planning, testing, project management,
unexpected hardware and software upgrades) cost estimates continue to rise. And, as
increasing numbers vie for the same limited number of service providers, rates may
6
escalate as well. A year ago initial projections indicated that anticipated costs would be
less than $.50 per line of code. Today, current industry metrics reflect that estimates
have risen to $1 - 2 per line. Even this number primarily reflects conversion costs and
may not include testing, hardware replacements, and systems software upgrades.
Testing is the key According to industry estimates, the actual conversion may represent
only 10 -20% of the total effort. The critical component, testing, will actually consume
most of the resources: 45 - 55% of the total effort. With so much of the code being
modified, we must verify that, in the process, we do not break something that was not
broken. Certifying those changes will be essential to continuing our normal processes.
The remaining 25. - 35% is accounted for with required planning.
Standards facilitate process. A recommended standard for data exchange was developed
by NIST and endorsed by the OMB Interagency Committee recently. Such standards
will help to creat~ much needed common ground for proje~ coordination and data
exchange between government agencies and the business community.
Good solutions - Bad solutions. There are several ways to approach this project. Anyone
who promises to quickly and cbeaply fix the problem is offering a "silver bullet- and
clearly is not doing us a favor. The Year 2000 problem emerges from the context of the
technical and organizational environment in which it was created and in which it resides.
And it will require the functional and technical stewardship of the individual government
owners to correct it
Allow agencies to perform their own solutions. The key to success is that the converters
must know the systems. Each department and agency internally has the best perspective
on what should be done to resolve the technical issues. In-house expertise is your best
expertise.
Chain is only as strong as its weakest link. Government agencies and the business
community continually exchange data, creating intricate interdependencies. Those
interdependencies create potential weaknesses that are not related to the internal health
of systems, but to those external groups upon which certain processes and business
functions are dependent. Firewal1s can be built to protect each agency's information
assets, and that covers the possibility of unconverted data But if their systems fail and
data is not available, contingency plans are needed.
Opportunities - Silver Lining
Coming 0ut.Ahead. If we address these problems correctly, some significant benefits can
come out of the effort. We will not only ensure survival but also improve practices.
7
Specifically, we will end up with a more complete, accurate and usable inventory of
hardware and software assets; a comprebensive evaluation of our capabilities; relevant
metrics and measures; streamlined project management practices; and the technical
infrastructure to improve tracking, accounting and transitioning. This information is
what was envisioned under the Government Performance and Results Act in terms of
well-defined outcomes and performance measures, resulting in better service.
Leveraging Government Resources. An immediate benefit of multiple agencies working
together is the opportunity to leverage tools, expertise, and best practices. Already,
OMB's Interagency Committee has put a website in place to facilitate the exchange of
best practices and-project experience (http://www.itpolicy.gsa.gov). Software routines
that have been developed for the government have also been exchanged. The
development of common approaches and standards will benefit the government by using
common resources to build benchmarking frameworks and to encourage franchise funds
for sharing products and deliverables.
Next Steps
Expand OMB Year 2{)()() Interagency Committee. OMB has demonstrated leadership in
establishing the Year 2000 Interagency Committee to provide a forum for exchanging
information and making Year 2000 recommendations. This Committee should be
expanded to include all agencies and formally chartered. While each agency would be
responsible for ensuring Year 2000 compliance for its information systems, the
Committee could provide high-level direction to agencies for resolving the Year 2000
problem. Its responsibilities would include the development and communication of Year
2000 data exchange, contracting, and software procurement guidelines. Likewise, the
Committee would facilitate the exchange of strategies, best practices and resources
across the government.
As a first order of priority, each agency must assess its own systems for vulnerability to
the Year 2000 problem, decide which of the systems to convert, prioritize its application
inventory, and prepare a Year 2000 conversion project plan. As part of its prioritizatio~
each agency must, with a very critical eye, identify which systems will be upgraded, what
solutions will be employed, and which systems will be replaced. This battlefield triage is
absoluteJy_ necessary to protecting the most vital systems from failure.
Support from Congress. Congress can assist the Federal community by understanding the
enormity of this challenge. I commend you, Representative Horn, and your Committee
for having taken leadership in promoting Year 2000 awareness. An increased awareness
of these issues will be critical when considering legislative requirements that will result in
new tasks that affect information systems. In addition, understanding these issues will
8
be essential as budgets are being considered. In fact, financial resources are needed to
address all the tasks discussed in the· testimony heard today.
I would like to thank this Committee for the opportunity to speok to this issue which is so
importont to OUT jituznciol and Federal C01IU1I1l1'Iity.
9
Average Age and Quantity of
Large Computers
(Over $1,000,000) - FY 1995
Quantit~
Average Age
263
250
15
200
10
150
100
5
50
o
/'!01
I
Navy
0ljJ
f0'A
DOD Treasury VA
w/t
DOJ
IVA
State
Quantity
Source: GSA ADPE/DS as of 9/30/95
0'41
DOT
/(@
DOC
'/??t
HHS
~ Average Age
"l-0t
GSA
WA
G.ij/lIO
DOE Other
Average Age and Quantity of
Medium Computers
($100,000 to $1 ,000,000) - FY 1995
Quantity
5,000
Average Age
I
i
18
4,000
15
3,000
10
2,000
5
1,000
Navy
DOD Treasury VA
DOJ
Quantity
Source: GSA ADPE/DS as of 9/30/95
State
DOT
DOC
HHS
~ Average Age
GSA
DOE
Other
a
Average Age and Quantity of
Small Computers
($10,000 to $100,000) - FY 1995
Quantity
r
Average Age
,o
10,000
C\J
~
8,000·
15
6,000
4,000' ,-
5
2,000
o
I
/?0i
Navy
DOD Treasury VA
U01
DOJ
////J
State
Quantity
Source: GSA ADPE/OS as of 9/30/95
//«J
DOT
////J'" ,
DOC
V<'l/A
HHS
~ Average Age
... ,
W/4
GSA
'«%ll
DOE Other
0
DEPARTMENT
OF
THE
TREASURY (~C~
TREASURY
NEW S
y~y_ _ _ _ _ _ _ _ _•
_ _ _ _ _ _ _ _ _....
~,78r..'l~.
OFFICE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C .• 20220 - (202) 622·2960
FOR IMMEDIATE RELEASE
April 16, 1996
Contact: Calvin A. Mitchell III
(202) 622~2920
Statement of Assistant Secretary for Tax Policy Les Samuels
on the Taxpayer Bill of Rights
Yesterday was tax day. Taxpayers work hard, and it is our responsibility to give them the
best value for every dollar they pay. President Clinton has done that government~wide, by
reducing the deficit, by making a dramatic cut in the federal workforce, and by reinventing
government.
With the filing season over, we must continue to protect taxpayer rights with respect to the
IRS as their returns are processed and evaluated.
First, we have taken 17 administrative steps since January to strengthen the rights of
taxpayers. These actions constitute about one~third of the changes contained in legislation
before Congress called the "Taxpayer Bill of Rights," Part II. Rather than waiting for this bill
to become law, we acted on a number of fronts.
For example, we are giving the IRS ombudsman more power to act as an advocate on behalf
of taxpayers to resolve disputes, to direct the issuance of refunds for people facing hardships,
and to stop collection actions. We now require the IRS to inform divorced or separated
spouses about attempts to collect joint taxes from the other spouse. And we have launched an
important study of the problems facing divorced or separated taxpayers.
Second, taxpayers' rights should be written down in plain English and made generally
available to the public. Treasury and IRS have developed a simple, straightforward
explanation of eight fundamental rights of taxpayers who must deal with the IRS.
RR~1007
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622·2040
The Commissioner of the IRS will include this "Declaration of Taxpayer Rights" at the front
of the main publication that goes to taxpayers who deal with the IRS. For example. the
declaration makes clear taxpayers' rights of privacy, the availability of administrative and
judicial review, and good- faith rules that shield taxpayers from certain penalties. The
Declaration also lets taxpayers know that if they believe an IRS employee has not treated
them in a professional or courteous manner, they can report that conduct to the employee's
supervisor and. in tum. to the IRS District Director or Service Center Director.
Third, we will continue to work with Congress to resolve a few remaining issues in the
Taxpayer Bill of Rights legislation that the House is voting on today. We urge Congress to
pass that bill promptly. This bipartisan legislation would, for example, extend the period
during which taxpayers can make a payment of tax without owing any interest after receiving
a bill from the IRS. It gives the IRS needed legal authority to correct errors in the collection
process, for example, with respect to tax liens. Finally, when the IRS has acted improperly, it
would make it easier for taxpayers to claim relief in court and to recover attorneys' fees.
This bill provides simple fairness for taxpayers, and it should be passed promptly.
The IRS is also making it easier for taxpayers to file. Electronic and telephone filings are up,
tax information is available on the Internet, and in 31 states, filing electronically permits
certain taxpayers to transmit their state and federal returns at the same time. Taxpayers who
are owed refunds are receiving them faster. And at the President's direction, we have
proposed "equitable tolling" to make it easier for incapacitated taxpayers to get the refunds
they are owed.
Working together, we can improve taxpayer service, protect taxpayer rights, and make tax
collection fairer for all Americans.
Attachment
-30-
DECLARATION OF TAXPAYER RIGHTS
I. PROTECTION OF YOUR RIGHTS: IRS employees will explain and protect your rights
as a taxpayer throughout your contact with us.
II. PRIVACY AND CONFIDENTIALITY: The IRS will not disclose to anyone the
information you give us, except as authorized by law. You have the right to know why we
are asking you for information, how we will use it, and what happens if you do not provide
requested information.
Ill. PROFESSIONAL AND COURTEOUS SERVICE: If you believe that an IRS
employee has not treated you in a professional manner, you should tell the employee's
supervisor. If the supervisor's response is not satisfactory, you should write to your IRS
District Director or Service Center Director.
IV. REPRESENTATION: You may either represent yourself or, with proper written
authorization, have someone else represent you in your place. You can have someone
accompany you at an interview. You may make sound recordings of any meetings with our
Examination or Collection personnel, provided you tell us that in writing 10 days before the
meeting.
V. PAYMENT OF ONLY THE CORRECT AMOUNT OF TAX: You are responsible for
paying only the correct amount of tax due under the law -- no more, no less.
VI. HELP FROM THE PROBLEM RESOLUTION OFFICE: Problem Resolution
Officers can help you resolve tax problems and can offer you special help if you would have
a significant hardship as a result of a tax problem. For more information, write to the
Problem Resolution Office at the District Office or Service Center where you have the
problem, or call 1-800-829-1040 (1-800-829-4059 for TDD users).
VII: APPEALS AND JUDICIAL REVIEW: If you disagree with us about the amount of
your tax liability or certain collection actions, you have the right to ask the IRS Appeals
Office to review your case. You may also ask a court to review your case.
VIII. RELIEF FROM CERTAIN PENALTIES: We will waive penalties where allowed by
law if you can show us you acted reasonably and in good faith or relied on the incorrect
advice of one of our employees.
DEPARTMENT
OF
TREASURY
THE
TREASURY
NEWS
omCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C•• 20220. (202) 622-2960
FOR RELEASE AT 2:30 P.M.
April 16, 1996
CONTACT:
Office of Financing
202/219-3350
TREASURY'S WEEKLY BILL OFFERING
The Treasury will auction two series of Treasury bills
totaling approximately $23,000 million, to be issued April 25,
1996. This offering will result in a paydown for the Treasury of
about $21,750 million, as the maturing bills total $44,739 million
(including the 42-day cash management bill issued on March 14,
1996, in the amount of $9,060 million and the 22-day cash
management bill issued on April 3/ 1996, in the amount of $11,062
million) .
Federal Reserve Banks hold $6,933 million of the maturing
bills for their own accounts, which may be refunded within the
offering amount at the weighted average discount rate of accepted
competitive tenders.
Federal Reserve Banks hold $7,923 million as agents for
foreign and international monetary authorities. Up to $3,000
million of these securities may be refunded within the offering
amount at the weighted average discount rate of accepted
competitive tenders. Additional amounts may be issued for such
accounts to the extent the aggregate amount of new bids exceeds
$3,000 million.
Tenders for the bills will be received at Federal
Reserve Banks and Branches and at the Bureau of the Public
Debt, Washington, D. C. This offering of Treasury securities
is governed by the terms and conditions set forth in the Uniform
Offering Circular (31 CFR Part 356) for the sale and issue by the
Treasury to the public of marketable Treasury bills, notes, and
bonds.
Details about each of the new securities are given in the
attached offering highlights.
000
Attachment
RR-I008
Fm- press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
HIGHLIGHTS OF TREASURY OFFERINGS OF WEEKLY BILLS
TO BE ISSUED APRIL 25, 1996
April 16, 1996
Offering Amount .
$11,500 million
$11,500 million
Description of Offering:
Term and type of security
CUSIP number
Auction date
Issue date
Maturity date
Original issue date
Currently outstanding
Minimum bid amount
Multiples .
91-day bill
912794 Z6 4
April 22, 1996
April 25, 1996
July 25, 1996
July 27, 1995
$29,967 million
$10,000
$ 1,000
182-day bill
912794 3L 6
April 22, 1996
April 25, 1996
October 24, 1996
April 25, 1996
$10,000
$ 1,000
The following rules apply to all securities mentioned above:
Submission of Bids:
Noncompetitive bids
Competitive bids
Accepted in full up to $1,000,000 at the average
discount rate of accepted competitive bids
(1) Must be expressed as a discount rate with
two decimals, e.g., 7.10%.
(2) Net long position for each bidder must be
reported when the sum of the total bid
amount, at all discount rates, and the net
long position is $2 billion or greater.
(3) Net long position must be determined as of
one half-hour prior to the closing time for
receipt of competitive tenders.
Maximum Recognized Bid
at a Single Yield
35% of public offering
Maximum Award .
35% of public offering
Receipt of Tenders:
Noncompetitive tenders
Competitive tenders
Payment Terms .
Prior to 12:00 noon Eastern Daylight Saving time
on auction day
Prior to 1:00 p.m. Eastern Daylight Saving time
on auction day
Full payment with tender or by charge to a funds
account at a Federal Reserve Bank on issue date
NEWS
OFFICE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W•• WASIBNGTON, D.C•• 20220 - (202) 622-2960
5.
.
FOR IMMEDIATE RELEASE
April 16. 1996
G-7 PRESS ADVISORY
Treasury Secretary Robert E. Rubin will hold a press briefing on this weekend' s 0-7
ministerial meeting at 2:30 p.m., Thursday, April 18, in Room 4121 of the Treasury
Department, 1500 Pennsylvania Avenue, N.W.
The G-7 finance ministers and central bank governors will meet Sunday, April 21 at
the Blair House. Arrivals of the ministers will be from 11 a.m. and will be on the
Pennsylvania Avenue entrance of the Blair House. There will be a "class photo" oppornmity
with the ministers and central bank: governors at 1:15 p.m. at the Blair House, followed by a
pooled photo opportunity of the participants in the working session.
Secretary Rubin will hold a press conference at 5:30 p.m. (time tentative) in Room
4121 at the Treasury Department following the meeting.
The 0-7 is comprised of the following countries: United States, Canada, France,
Germany, Italy, Japan and the United Kingdom.
Cameras may begin setting up 45 minutes prior to the two press conferences. Media
without Treasury, White House, State, Defense or Congressional credentials wishing to attend
should contact the Office of Public Affairs by phone at (202) 622-2960 or by fax at (202)
622-1999, with the following information: name, social security number and date of birth, by
close of business Wednesday.
Treasury press offIce contacts;
Michelle Smith
General G-7 issues
Hamilton Dix
Press Pools
Hortense Henderson Clearance
-30RR-lO09
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
TREASURY
NEWS
OFFICE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C .• 20220. (202) 622·2960
TESTIMONY OF JAMES E. JOHNSON
ASSIST ANT SECRETARY OF THE TREASURY
(ENFORCEMENT)
BEFORE THE SUBCOMMITIEE ON
TREASURY, POSTAL SERVICE AND GENERAL GOVERNMENT
OF THE SENATE APPROPRIATIONS COMMITTEE
APRIL 17, 1996
RR-1010
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
DEPARTMENT OF THE TREASURY
Statement of James E. Johnson
Assistant Secretary (Enforcement)
April 17, 1996
FY 1997 Appropriations Hearing with the
u.s. Customs Service
Bureau of Alcohol, Tobacco and Firearms
U.S. Secret Service
Federal Law Enforcement Training Center
Financial Crimes Enforcement Network
Before the Senate Committee on Appropriations
Subcommittee on Treasury, Postal Service and General Government
Chairman Shelby, Senator Kerrey, Members of the Committee, I appreciate the opportunity to
testify on the Department's FY 1997 request for Treasury enforcement. I look forward to
continuing and building on our productive relationship with the Members and staff of this
Committee.
With me today are George Weise, Commissioner of Customs, John Magaw, Director of the
Bureau of Alcohol, Tobacco and Firearms, Eljay Bowron, Director ofthe Secret Service, Charles
Rinkevich, Director of the Federal Law Enforcement Training Center (FLETC), and Stanley
Morris, Director of the Financial Crimes Enforcement Network. These representatives can
provide greater detail and insight into the law enforcement initiatives of their respective agencies,
and how those initiatives relate to our current budget requests.
Even in my short time on the job, I have learned a great deal concerning the important work
performed by Treasury enforcement. These bureaus' missions are vital to the protection of our
nation. I have acquired already a deeper appreciation of the piOfessionalism and skill they bring
to the fultillment of such missions. Let me refer to a few current examples. Due to their law
enforcement expertise, two Treasury bureaus, Internal Revenue Service's Criminal Investigation
Division (lRS/CID) and the Bureau of Alcohol, Tobacco and Fireanns (ATF) are assisting onsite with execution of the search warrant that began April 3, 1996, at the premises of led
Kaczynski near Lincoln, Montana. Similarly, the Department of the Treasury is involved with
the terrorism bill currently before the Congress. Several sections of the bill directly impact upon
our operations. For example. Treasury is responsible for studying the use of tracer elements in
certain explosive materials. These so-called "taggants·' will enable law enforcement officers to
-2develop leads when conducting investigations of explosive incidents.
I am making it a high priority to ensure that our enforcement bureaus maintain complementary
and supplementary jurisdictions; therefore I plan to identify and address any areas of duplication.
Also, it is my goal to set tough but achievable performance measurements across-the-board.
Professionalism, training, and integrity are high priority issues. The Department of the
Treasury's Report of the Good 0' Boys Roundup Policy Review contains fifteen
recommendations for changes in law enforcement personnel policy. It is my responsibility to
oversee the implementation of these recommendations. The Policy Review recommendations
reach the issues of racism and bias in hiring, training, evaluation, and discipline. Simply put, the
new rules will make clear that we won't tolerate racist or biased conduct from Treasury's law
enforcement officers whether on- or off-duty.
Treasury Enforcement Strategies
Treasury's enforcement bureaus collect revenues, provide valuable regulatory services, and
enforce criminal laws. The multiple functions of collection, regulation and enforcement have
created both a unique expertise within our bureaus on each issue for which they are responsible,
as well as important synergies within such bureaus and across the entire Department.
The experience, expertise, and synergy within and across our bureaus enhance their capacities to
meet their important strategic priorities which include:
•
Ensuring the safety of the President and other protectees while maintaining a balance
between security needs and appropriate public access;
•
Reducing gun violence and promoting the safety and security of Americans;
•
Preventing the smuggling of narcotics and other contraban0, enforcing trade laws through
traditional enforcement methods, promotion of voluntary compliance, and ensuring
compliance with economic sanctions;
•
Helping to support and maintain the integrity of our financial institutions by combating
money laundering and other financial crimes by blenJing Treasury's law enforcement and
financial services regulatory oversight expertise to track proceeds generated by such
criminal entities as drug traffickers and organized crime organizations;
•
Deterring the counterfeiting of our currency and suppressing the il1egal use of access card
privileges by strategically increasing the number and deployments of personnel at
domestic and foreign locations, and by anticipating and addressing vulnerabilities
introduced by emerging technologies associated with the electronic environment; and
- 3•
Preparing the Treasury enforcement workforce for the 21 st century by promoting
integrity. operational excellence. and diversity while ensuring respect for the importance
of family. civic. and individual priorities. The FLETC helps by applying innovative and
proven teaching methods and sophisticated technology.
Despite the success that they have had in meeting their law enforcement challenges, our bureaus
continue to explore ways to improve their service to the public. I would like to discuss some
more recent initiatives. by bureau.
U.S. Customs SeD'ice
Customs extraordinary work is most apparent in narcotics interdiction, money laundering, and
trade enforcement.
As smugglers have changed their methods, Customs, too. is using different tools and
strategies. In FY 1995, Customs discovered and/or seized 66 percent of federal cocaine
seizures, 87 percent of all federal heroin seizures, and 57 percent of all federal marijuana
seizures. Customs continues to seize more drugs than all other federal law enforcement
agencies combined.
In 1995, Customs introduced Operation Hard Line to strengthen and tighten the ports of
entry through facility improvements and the use of technology. The results on the
Southwest border after one year of Hard Line are dramatic. Port running incidents
declined by 42 percent, and Customs agents and inspectors seized 19 percent more
cocaine, 108 percent more heroin, and 25 percent more marijuana last year than the year
before.
To respond to the threat in the Caribbean area, Customs has launched Operation Gateway
to advance a comprehensive and unified securing of Puerto Rico, the U.S. Virgin Islands,
and their surrounding waters and airspace from narcotics smugglers. Narcotics traffickers
are increasingly using this area as a strategic location for the introduction and
transshipment of narcotics into the U.S. and Europe. In FY 1995, Puerto Rico
transshipment cocaine seizures increased by 500 percent. As further evidence of the
increase in trafficking through Puerto Rico and the Virgin Islands, the current prices of
narcotics in those locations are the lowest in the f).S., second only to South American
prices; and local usage has skyrocketed.
-4-
Bureau of Alcohol. Tobacco and Firearms
ATF serves as the regulator for the legal commercial activities carried out by the alcohol, tobacco
and fireanns industries and for the explosives industry. ATF oversees the collection of nearly
$13 billion in alcohol, tobacco, firearms, and ammunition excise taxes annually, and protects $27
billion in bonded liabilities while conducting almost 4,000 alcohol compliance inspections. ATF
has initiated innovative programs in both federal and local law enforcement communities.
The ATF, working with the private sector, has developed a remarkable computer system
that enables investigators to trace bullets to guns the way fingerprint experts can trace
prints on a glass to a specific person. Technology incorporated into ATF's "Ceasefire"
program saves hundreds and hundreds of hours of staff time matching up the unique
signatures left on bullets and shell casings. This means if you find the gun, in just hours,
you can trace connections with seemingly unrelated crimes.
ATF maintains four regional National Response Teams (NRT) to help federal, state, and
local investigators overcome the difficulty inherent in large-scale arson or explosives'
crime scene investigations. Each NRT consists of s~cial agents, explosives and arson
technicians, and forensic scientists. Since 1979, ATF has activated NRTs to several
hundred incidents involving more than 400 deaths, thousands of injuries, and billions of
dollars in property damage.
Included among these cases, of course, are the Oklahoma City and World Trade Center
bombings. The responses to these attacks provided textbook examples of cooperation
between federal, state, and local law enforcement authorities. They also proved, yet again,
ATF's unrivaled expertise on explosives investigations. Such expertise will be
invaluable as we attempt to further strengthen law enforcement and society against future
terrorist attacks. In this regard, ATF, as well as all of the Treasury law enforcement
bureaus and offices, will be called upon to shoulder an even greater load against terrorists
upon passage of an antiterrorism bill. We hope the Committee will support the
Administration when it seeks to secure actual appropriations needed to fulfill our
antiterrorism mandate.
Using the National Law Enforcement Telecommunications System, ATF field offices are
beginnir.g to submit trace requests electronically. Also, ATF recently developed state-ofthe-art computer software (i.e., Project LEAD) which analyzes firearms trace data from
the National Tracing Center (NTC). As part of this effort, system upgrades enhanced the
NTC's capability so that more information about firearms tra!1sacticns, recovery, multiple
sales, and stolen weapons are made available to federal and local law enforcement
communities.
- 5V.S. Secret Senice
In an increasingly hostile world, the Secret Service accomplishes its protective and investigative
missions effectively. The Secret Service investigates and prevents the counterfeiting of our
currency, stamps. bonds, and checks. The Secret Service represents the world's foremost experts
on counterfeiting. It played a critical role in the redesign of the $100 note which Treasury
introduced last month. Moreover, the Secret Service and FinCEN are developing ways to protect
Americans and our financial system from crimes involving credit and debit cards, smart cards
and electronic cash. They are examining and responding to practices within the services industry
that may encourage white collar crimes through partnerships with industry representatives. This
is an example, with both the new currency and the matter of electronic payments, of prevention-rather than trying to enforce the law after the fact.
The Secret Service has implemented many White House Security Review
recommendations, including the closure of Pennsylvania Avenue in front of the White
House, to ensure the security of the President and the First Family and the White House
Complex.
The Secret Service provided security for the Pope's visit to the U.S. and the
unprecedented gathering of 150 Heads of State at the 50th Anniversary celebration of the
U.N. General Assembly.
During the five-year period FY 1990 through FY 1994, the Secret Service seized more
than $266 million of the $310 million in counterfeit bills produced domestically before
the violators circulated it. (More than 65 percent of the our currency is in circulation
abroad.) During that same period, the Secret Service arrested more than 9,000
individuals on counterfeiting charges.
Federal Law Enforcement Training Center
At the training center, the staff teaches new officers about enforcement tactics, how to shoot,
how to drive, cybercrime, and how international crime syndicates use computers and financial
systems to help hide their gains. FLETC prepares new officers to deal with both violent and
high-tech criminals. They design this training to ensure that enforcement personnel are prepared
to combat emerging criminal trends. Let me add that in my 3versight function, I believe training
is essential to having effective law enforcement that gains the necessary respect of the American
public. Such respect is critical to the success of law enforcement.
During FY 1995, FLETC provided 77,659 student weeks of training to 21,810 students.
In FY 1996. FLETC estimates it will provide 116,699 student training weeks to 25,408
students. Most of the increases in training workloads are due to the INS "build up" to
buttress border control.
-6FLETC's current facilities (Glynco, Georgia and Artesia, New Mexico) cannot
accommodate projected training; therefore FLETC is establishing a temporary facility in
Charleston, South Carolina.
FinCEN
FinCEN implements Treasury anti-money laundering regulations through administration of the
Bank Secrecy Act It also supports federal, state and local law enforcement authorities as a
fmancial intelligence center for data collection and analysis. FinCEN's goal is to improve the
ability to analyze financial intelligence derived primarily from commercial, financial and other
law enforcement databases. This will permit an expanded distribution of money laundering
information to federal, state, and local law enforcement agencies, regulators, and the financial
sector by using advanced technologies.
This month FinCEN implemented the new national Suspicious Activity Reporting
System (SARS). The new system will aid criminal investigations while cutting
burdensome and costly paperwork for America's banking system. SARS merges and
revolutionizes two older reporting systems that had been in place for more than a decade.
In a unique partnership, FinCEN will administer it with the IRS Detroit Computing
Center, other federal law enforcement, and the five bank regulatory agencies. It will
improve our ability to detect, analyze, and understand criminal financial activity, to
assure that information about the activity gets to the appropriate law enforcement and
regulatory authorities as close to real time as possible. SARS exemplifies interagency
cooperation and the importance of working with industries who interact with law
enforcement.
These enforcement efforts have been enhanced greatly by the leadership and support for law
enforcement provided by Secretary Rubin. Under the Secretary's leadership, Treasury's Office
of Enforcement provides policy oversight, coordination, guidance, and support to and between
our bureaus. I meet regularly with the bureau and office heads, and make myself available to
ensure that this role is carried out. Deputy Secretary Summers also meets regularly with our
bureau heads to ensure better oversight and support. He also meets with his counterpart at the
Department of Justice, Deputy Attorney General Gorelick, to ensure coordination between the
Treasury and Justice bureaus.
FY 1997 Budget Request
Now I will turn to our FY 1997 request. While the bureau representatives will speak in greater
detail on our budget requests, I would like to touch on several important budget themes and
highlights. The FY 1997 budget seeks resources to help Treasury combat violence, money
laundering, and other financial crimes, fraud, and narcotics smuggling. The $2.760 billion
request for Treasury law enforcement bureaus includes $97.2 million available under the Violent
- 7Crime Reduction Trust Fund which the Congress established in 1994. These resources will
continue investments begun in FY 1995 and FY 1996. and will achieve selected program
enhancements. The following are some of our initiatives.
•
U. S. Customs Service: To further strengthen our efforts to fight the importation of
illegal narcotics at the border. we are requesting $65 million and 657 FTE for the
Customs Service to enhance enforcement operations on the Southwest Border.
Specifically, the requested funds would allow for the hiring of new agents, inspectors,
canine enforcement officers, and support personnel, as well as the purchase of nonintrusive inspection technology, the construction of infrastructure improvements to
reduce border violence, and the purchase of other support equipment.
•
Bureau of Alcobol, Tobacco and Firearms: To support arson investigation functions,
we are requesting $62 million for laboratory facilities. The new fund would allow ATF
to purchase land, and design and construct both a new laboratory facility and a unique fire
research facility which will support our arson investigative function. An analysis shows
building instead of leasing will save the federal government in excess of $100,000,000
over the period of a 20 year lease.
To strengthen our efforts to deal with armed career criminals, we are requesting $29
million and 62 FTE for ATF for firearms trafficking, training state and local enforcement
personnel, equipment and personnel for ATF's firearms tracing center, and integrated
ballistics imaging system machines.
•
U.S. Secret Service: To build upon the progress we made last year in protecting the
White House Complex and combating counterfeiting, we are requesting $26.2 million
and 179 FTE for additional personnel, replacement vehicles, and equipment to support
security, protection, and crime fighting efforts.
•
Federal Law Enforcement Training Center: To captllil! savings and efficiencies
associated with new technologies, we are requesting $.8 million and 2 FTE for distance
learning and new computer-based training techniques.
•
Financial Crimes Enforcement Network: To enhance our capability to address the ever
changing complex world of money laundering and other financial crimes, we are
requesting $1 million and 5 FTE to expand our knowledge of emerging technologies
associated with cyberpayment systems, including the vulnerabilities they pose.
Mr. Chainnan. I would like to close by thanking you, Senator Kerrey, and the other Members of
this Committee for having us here today and for your support of Treasury enforcement.
I will be happy to answer any questions you may have.
JAMES EDWARD JOHNSON
ASSIST ANT SECRETARY OF THE TREASURY FOR ENFORCEMENT
James E. Johnson was sworn into office as Assistant Secretary of the
Treasury for Enforcement on March 15, 1996.
As Assistant Secretary for Enforcement, Mr. Johnson oversees all
Treasury law enforcement bureaus and offices, including the U.S. Customs
Service ("USCS"), the U.S. Secret Service ("USSS"), the Bureau of Alcohol,
Tobacco and Firearms ("A TF"), the Federal Law Enforcement Training Center
("FLETC"), the Financial Crimes Enforcement Network ("FinCEN"), the Office
of Foreign Asset Control ("OFAC") and the Executive Office for Asset Forfeiture
("EOAF"). He also has policy oversight responsibility for the Criminal
Investigation Division of the Internal Revenue Service. He is responsible for
Treasury law enforcement direction and policy communication with other U.S.
government departments on these matters. This includes the suppression of
narcotics and dangerous drug smuggling, monitoring the movement of large
amounts of currency into and out of fmancial institutions, implementing U.S.
government embargo programs, enforcing tariff and trade regulation, protecting
the President, the Vice President and visiting heads of state and collecting excise
taxes and regulating trade in tobacco, alcohol and firearms.
From March 1990 until his appointment at Treasury, Mr. Johnson served
as Assistant United States Attorney for the Southern District of New York where
he was the Deputy Chief of the Criminal Division.
From November 1994 to March 1995, Mr. Johnson was Assistant Director
of Treasury's White House Security Review. From 1987 to 1990, he was a
litigation associate with the law firm Debevoise & Plimption in New York City.
From 1986 to 1987, he was a law clerk for United States District Judge Robert E.
Keeton in Boston, Massachusetts.
Mr. Johnson graduated cum laude from Harvard Law School, receiving his
J.D. in 1986. He graduated cum laude from Harvard University with a B.A. in
1983. Mr. Johnson was born in Montclair, New Jersey on December 29, 1960.
NEWS
TREASURY
OFFICE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220 • (202) 622-2960
FOR IMMEDIATE RELEASE
April 17, 1996
Contact: Joyce McDonald
(703) 905-3770
NEW BANK REPORTING RULE TO CUT PAPERWORK BY 20 PERCENT
The Treasury Department today announced a new bank reporting rule designed to
both significantly reduce unnecessary paperwork for America's banks and improve the
quality of information routinely provided to law enforcement.
The new rule will go into effect May 1, 1996, changing the previous requirement for
banks to file forms reporting every currency transaction in excess of $10,000. Such
transactions will no longer need to be reported if they involve the following:
*
Another bank in the United States.
* Any federal, state or local government (including the District of Columbia, U.S.
territories and possessions, and various tribal government authorities).
*
Any listed corporation whose stock is traded on the New York Stock Exchange, the
American Stock Exchange (excluding stock listed on the Emerging Company
Marketplace of the American Stock Exchange), is designated as a Nasdaq National
Market Security listed on the Nasdaq Stock Market (excluding stock issued under the
separate Nasdaq Small-Cap Issues heading), and any consolidated subsidiary of a
listed corporation that files combined federal income tax returns.
By exempting these entities from routine reporting, Treasury estimates that banks will
be required to file 2 million fewer forms in the first year alone, amounting approximately to
a 20 percent reduction. However, the new rule will continue to require that all apparently
-suspicious currency transactions -- even those of newly exempted entities -- be reported
according to_rules issued earlier this year. These reports are used by law enforcement for
criminal investigations.
"This streamlined reporting system has resulted from Treasury's firm commitment to
constructive cooperation among the financial, regulatory and enforcement communities," said
Treasury Secretary Robert Rubin. "It will provide law enforcement with a more focused
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-2-
stream of quality information and allow our financial institutions to operate more efficiently. "
The new rule is issued by Treasury's Financial Crimes Enforcement Network
(FinCEN) under the Bank Secrecy Act (BSA). The BSA authorizes reporting requirements
and is a key component of the Treasury's effort to fight financial crimes such as money
laundering, bank fraud and tax evasion.
Information provided by transaction reports is vital to investigators, but reporting
requirements had been criticized by banks because they mandated repetitive paperwork for
the routine transactions of legitimate cash intensive businesses and governments. Banks will
now be able to make a one-time filing of the standard transaction report form simply to
designate an exempted- entity. An exemption may be revoked by Treasury with notice at any
time.
"This rule is a major step in our continued efforts to eliminate from the system
reports of little or no value to law enforcement," said FinCEN Director Stanley Morris.
"This improvment will enable banks to concentrate resources where they will do the most
good, quickly reporting suspicious activity to law enforcement authorities."
Once the new rule goes into effect, it will be considered on an interim basis for 90
days during which all interested parties are invited to offer comments. Following the 90-day
comment period, FinCEN will prepare a final rule. The interim rule was sent to the Federal
Register today and will be published soon.
-30-
Additional contact: Darren McKinney
(202) 622-2960
TREASURY
NEWS
I
omCE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C .• 20220. (202) 622.2960
FOR IMMEDlA1E RELEASE
Remarks as prepared for delivery
April 18, 1996
RECORD 1ESTIMONY OF TREASURY SECRETARY ROBERT E. RUBIN
HOUSE APPROPRIATIONS SUBCOMMITTEE ON FOREIGN OPERATIONS
Mr. Chairman and members of the Subcommittee: We meet at a time of
challenge for those who make and fund the foreign policy of the United States. It would
be an error of major proportions to turn away now from a world that is becoming more
democratic, more capitalist and more open to trade than at any time in our history.
That is why we ask you to do the politically difficult but substantively correct thing with
regard to support for the International Financial Institutions (lFls).
In recent months, I have personally observed the results of just some of the work
of the multilateral development banks.
In a shantytown in Brazil last year a woman told me that before the World Bank
began a community development program to install a sewage system and build a
community center, she would sit up nights to make sure rats did not harm her children as
they slept, and she feared for their future. Now, she and the children sleep nights, and
the children go off in the morning for schooling and training. She has hope not just for
her children's future, but for her own. I saw families in a poor town in India who are
raising their living standards with a bank-sponsored water and soil conservation program.
Last month, a woman in a poor suburb of Manila told me how a small loan from a
cooperative backed by the Asian Development Bank -- a loan on the order of $200 -- is
helping her family build a business ferrying people and packages with a motorcycle and
sidecar. She carne to tell me this -- even though her father died just hours earlier -because she wanted not just me, but you to know how lives are being changed for the
better.
In these places, and countless others across the globe, the work of the
international financial institutions -- the World Bank, regional development banks, and
the International Monetary Fund (IMF) -- has a broad impact on our economy. Every
American, directly or indirectly, is affected by these institutions and has an interest in
continuing to support the banks and the Fund.
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2
Why? Because they encourage economic reforms that turn economies around and
open markets -- markets for American goods and services, and well-paying jobs for
Americans. They also support improved environmental protection. Six years ago, India
was on the verge of economic collapse. Today, given India's recovering economy and
more open markets, the United States is the largest foreign investor in India. Twenty
nations that two and three decades ago were in dire condition have now graduated from
concessional lending programs and are among our fastest growing markets -- Korea,
Indonesia, Thailand, Turkey to name a few. The IFls also provide opportunities for U.S.
business to supply goods and services for bank-sponsored projects.
The IFIs are rebuilding shattered economies. In Bosnia, the World Bank has
been extraordinarily pro-active in assessing Bosnia's needs for postwar reconstruction.
Plans to construct and transform nine economic sectors are moving forward. The
European Bank for Reconstruction and Development is gearing up to help Bosnia's
private sector get back on its feet. Our Executive Director, Lee Jackson, gave his life in
that effort on Secretary Ron Brown's ill-fated mission. In a similar vein, the World Bank
is equally active supporting peace in the Middle East.
The IFIs help debt-saddled nations. A decade ago, many Latin nations were in
serious difficulty. The debt problem was immense. Today, after IFI support for budget
and financial market reform, privatization and liberalization, Latin America has come to
a new consensus to pursue market-based economies. Democracy has spread, U.S.
commercial interests have thrived, and it is the world's second fastest growing region.
That would not have happened without IFI support. The IFIs also now are at the
forefront in helping the region address its vast social development needs.
The institutions support the transition from communism to free market democracy
and are taking the lead in reforming the legal, regulatory and financial systems that have
stifled entrepreneurship, investment, trade and efficiency.
The IFIs protect the global environment. For example, the North American
Development Bank is preparing to finance environmental infrastructure work on both
sides of the U.S. Mexico border. The IFls also help protect Americans from
deterioration of the global environment. At the urging of the United States, the IFIs
have adopted strong environmental policies and significantly increased their investments
in environmentally oriented projects. This supports our trade and commercial interests
by raising developing countries' environmental standards as well as their use of
environmentally efficient technology, an important growth area for U.S. industry. The
Global Environment Facility is the primary institution for defining development
strategies that are both pro-growth and pro-environment.
And in area after area, the IFls have an important impact on Americans, because
they directly influence growth, development and reform that means new and growing
markets for our goods, and better jobs and living standards for Americans.
3
Moreover, as Secretary Christopher discussed with you last month, the institutions
further our key foreign policy goals, and our international economic policy aims, by
directly contributing to economic and political stability in areas important to our national
security. They are the international community's economic tools for times of crisis, and
they also help fulfil U.S. obligations under international agreements, such as the climate
change convention. In Mexico, the Middle East, Bosnia, Haiti, or wherever crisis lies
around the corner, the institutions can concentrate highly leveraged economic assistance
-- to be blunt, a great deal of other people's money and a little of ours. They can direct
the long-term reforms that are necessary. Beyond their role in crisis management, the
IFIs are tools to create growth, open and integrate markets, and address the global
problems of endemic poverty, environmental degradation, mass refugee flows, and
unsustainable population growth which are too large for anyone nation to address alone.
As the Clinton Administration exercises a policy of global leadership and
engagement in a period of unprecedented change and extraordinary opportunity, the IFIs
make a difference for America. It is imperatively in our long-term economic,
environmental and national security interests to support these institutions vigorously.
Mr. Chairman, U.S. participation in the international financial institutions is at a
crossroad. We must honor our international commitments. In these important
institutions, it is critical that we ensure our continued capacity to lead, especially when
forceful U.S. leadership over a period of years is yielding dividends. At the same time,
we must also set priorities when budget resources are scarce.
1. Priority Objectives
The Administration'S FY 1997 budget request of just under $1.48 billion for the
IFls and debt reduction programs is a carefully crafted approach intended to achieve five
priority objectives:
•
maintain a major and vital U.S. leadership role in system in which
we have a major investment, and on which we increasingly rely;
•
build on an impressive record of success in shaping IFI lending
programs and priorities to serve critical U.S. economic,
political and commercial interests;
•
support cost-effective multilateral programs ~or'pove~
.
reduction, sustainable growth and market-bUlldmg, whIch pay high
long-term dividends both at home, in terms of jobs and higher
living standards for Americans, and abroad;
•
reinvigorate policy reform efforts and sustained economic growth
by extracting the poorest countries from the spiral of escalating
4
debt; and,
•
meet existing U.S. financial commitments to the IFIs with minimal
further delay.
The Administration is committed to achieving these goals with less budget
resources than in the past. We have framed a medium-term approach that reduces U.S.
expenditures on the IFls through FY 2002, without harming our interests or forcing a
budget-led withdrawal from the world. We recognize your concern that the United
States get the most for its investment in these institutions.
The United States, with voting shares ranging from less than 6 percent in the
African Development Bank to over 30 percent in the Inter-American Development
Bank, does not have the voting power unilaterally to set the policies and priorities that
influence IFI lending. This requires skillful U.S. leadership and persuasion to advance
our development agenda.
\Vhile financial support is not the only determining factor of member influence in
the IFIs, it is particularly important. The U.S. share of IFI financing has been declining,
and given our budget realities, this trend is likely to continue. Key European countries
and Japan have become aggressive in their efforts to increase their own policy influence
to a level more commensurate with the increased support they are providing to the
institutions. The significant funding reductions approved by the Congress in FY 1996
severely undermine U.S. credibility and leverage throughout the multilateral financial
system.
2. Responding to U.S. Policy Concerns
We recognize, as do you, that these institutions, for as much good as they are
doing, have their shortcomings, which we are using our leadership to remedy. The
institutions have been extremely responsive to an ambitious U.S.-inspired reform agenda.
\Vhile more must be done, significant progress has been made to: improve lending
quality and portfolio performance; strengthen efforts to promote private sector
development; deepening support for poverty reduction; increase transparency,
accountability and public participation; integrate environmental considerations into
development programs; and improve management efficiency and institutional
responsiveness.
For example, IFI operations and projects have adopted much higher standards for
transparency, accountability, public participation and environmental sustainability.
Ordinary citizens now have important new information about, and an important new
voice in, the development activities of their own governments.
5
Moreover, they are shifting the focus of development efforts to the private sector
wherever possible. They are sharpening attention on human resource investments rather
than infrastructure, establishing sensible environmental regulation, working to improve
primary education, especially for girls, to improve primary health care and to provide
safe water supplies. These are areas in which there is no realistic prospect, at least in
the medium term, for private sector or bilateral investments.
Other changes in IFI operations include the development of comprehensive policy
guidelines; restructuring for institutional efficiency; the preparation of detailed country
assistance strategies, including an examination of borrowers' spending priorities
encompassing military expenditures; the systematic incorporation of private sector
development objectives in operations; and the revision of procurement guidelines and
policies.
Mr. Chairman, no shareholder has pressed more aggressively than the United
States for the IFls to address these important concerns and adapt their operations to new
realities.
Looking ahead, our priorities are to ensure effective implementation of the
reforms, to make further progress in reorienting the institutions toward private sector
development and social needs, and to encourage greater institutional activism in reducing
military expenditures, promoting basic worker rights, and combating bribery and
corruption. A continued forceful U.S. presence in the institutions -- both financially and
intellectually -- is central to continued success.
I would like to stress that there are clearly defined U.S. national interests for both
bilateral and multilateral lending programs. Each has different comparative advantages
depending on the U.S. objectives they are intended to meet. The efforts of these
programs to promote free markets and reduce poverty complement, rather than
substitute for, each other.
3. FY 1997 Request for the IFIs and Debt Programs
Three factors have shaped our budget request for FY 1997:
•
The first is the deep backlog in U.S. commitments -- some $1.5 billion, created by
deep funding cuts in MDB and debt reduction accounts. In the current fiscal
year, funding was 51 % below the Administration'S request and 38% below the FY
1995 appropriated level.
•
A commitment to meet our existing funding commitments to, and remain
effectively engaged in, the interna60nal financial institutions, and to deliver on
our pledge to participate in international debt relief efforts.
6
•
A commitment to lower future U.S. contributions to the institutions, leading to
substantial further reductions in the IFI! debt accounts through FY 2002.
The Administration's budget request for FY 1997 is an effort to achieve these
objectives in a balanced, prudent and realistic manner that merits congressional support.
U.S. interests, U.S. credibility, and the future U.S. role in the international financial
system are all on the line. The specifics of our request are in an attached table.
World Bank Group -- $1041.2 million
•
$934.5 million to meet the full amount of outstanding and overdue U.S.
commitments to the IDA-I0 replenishment.
•
$6.7 million to meet an outstanding and overdue U.S. commitment to the
International Finance Corporation (IFC).
•
$100 million for the Global Environment Facility (GEF), leaving overdue
commitments of $67.5 million.
Our investment in the GEF serves our short- and long-term economic and
environmental security interests both effectively and inexpensively. The bulk of future
threats to the global environment comes from developing countries, and the GEF plays a
key role in our efforts to avert those threats. The GEF also provides important
procurement opportunities for U.S. companies. U.S. firms dominate markets for many
cutting edge environmental technologies, and these are key growth sectors worldwide.
U.S. firms are major players in biotechnology and low-impact resource extraction. Our
firms will benefit from the GEF's portfolio of sustainable resource use projects.
Asian Development Bank Group -- $113.2 million
•
$100 million for the Asian Development Fund (ADF), a partial payment on a
1991 replenishment commitment, leaving an outstanding and overdue commitment
of $237 million.
•
$13.2 million for a scheduled capital subscription payment for the Asian
Development Bank (ADB) capital increase agreed in 1994.
7
It is imperative that we maintain the current level of funding for the Asian
Development Fund. The ADF operates in a region that is home to two-thirds of the
world's poor. The ADF faces its challenges by taking the lead, for example, in
developing strategies that enhance child nutrition and encourage governments in the
region to invest more in children, particularly education. We owe the ADF $337 million,
putting us fully two years behind schedule. Contributing to the ADF yields important
dividends. U.S. firms are number one among donor countries in winning ADB
procurement contracts. Last year, U.S. firms won $320 million in contracts. More
important is the follow-on business. The $2 trillion developing Asian economy -- a $1
trillion market for exports -- offers enormous opportunities for U.S. business, and U.S.
exports to developing Asia have virtually tripled since 1987.
Inter-American Development Bank Group -- $84.5 million
•
$31.4 million for the Inter-American Bank's Fund for Special Operations (FSO),
comprising a scheduled payment of $20.6 million and payment of overdue
commitments amounting to $10.8 million.
•
$27.5 million to the Inter-American Bank's Multilateral Investment Fund (MIF),
leaving outstanding and overdue commitments of $178.8 million.
•
$25.6 million for a scheduled capital subscription payment for the Inter-American
Development Bank (IDB) capital increase agreed in 1994.
The 1994 IDB capital increase has ensured that the Bank can meet the region's
needs by lending, at a sustainable level, over $7 billion a year. This includes
concessionallending to the region's poorest nations. This means that the IDB will soon
be able to operate without continued infusion of government funds, but still address U.S.
policy priorities into the next century.
African Development Bank Group -- $66 million
•
$50 million for the initial payment of a proposed $200 million U.S. share in the
replenishment of the African Development Fund (AfDF), now under negotiation.
•
$16 million for an initial payment of an approximately $135 million paid-in
portion of the U.S. capital subscription to an African Development Bank (AIDB)
capital increase, now under negotiation.
Other International Financial Institutions -- $127.7 million
•
$56.3 million for a scheduled capital subscription payment to the Nortb American
Development Bank (NADBank).
8
•
$52.5 million for the first of five annual capital subscription payments to the new
Bank for Reconstruction and Development in the Middle East and North Africa
(MEDB).
•
$11.9 million for the overdue and outstanding U.S. commitments under the initial
European Development Bank (EBRD) capitalization agreed in 1990.
•
$7 million toward the $75 million outstanding U.S. commitment to the
International Monetary Fund's Enhanced Structural Adjustment Facility (ESAF).
Debt Reduction Programs -- $47 million
•
$47 million for debt reduction programs, including $22 million for the poorest
countries and $25 million for Jordan.
4. Discussion of Specific Requests
International Development Association (IDA).
For the United States, as well as the 3 billion people living in the world's poorest
countries, IDA is the single most important provider of concessional development
assistance, as well as technical assistance and policy guidance. Established at President
Eisenhower's initiative in 1960, IDA provides funding and technical assistance primarily
to promote open-market policy reform and to support priority social and human
development investments such as primary education and health care, and critical
infrastructure such as clean water and rural roads. IDA continues to sharpen its focus
on these broad priorities, on the poorest countries which do not have access to
alternative sources of finance, and on integrating environmental and market-building
considerations systematically into its operations.
u.S. payments to IDA are currently being made in respect of the Bush
Administration'S $3.75 billion, three-year commitment to IDA's tenth replenishment
(IDA-10). This Administration'S FY 1996 funding request was sharply reduced in the
legislative process. The $700 million appropriation for FY 1996 leaves $934.5 million
still outstanding under on our IDA-IO commitment.
These circumstances figured prominently in international negotiations for a new
multi-year replenishment of IDA (IDA-11), which were recently concluded. Our
emphasis throughout the negotiations on the three following fundamental positions,
developed in consultation with Congress, delayed the conclusion of the negotiations:
•
clearing the outstanding $934.5 million U.S. commitment to IDA would be our
first priority;
9
•
we would not make any pledge to IDA-II in advance of indications from
Congress of what it would be prepared to consider;
•
any new U.S. commitment to IDA will be substantially below past U.S .
commitments.
The Administration'S IDA request for FY 1997 and proposed approach for the
years ahead specifically incorporate these important considerations.
•
For FY 1997, we are requesting the $934.5 million needed to pay down fully the
existing and overdue IDA commitments. This would not include any new U.S.
funding for IDA-ll, effectively delaying U.S. participation beyond the FY 1997
start-up date already committed by IDA's other donors. Other donors, however,
did not want to disrupt IDA's operations by leaving a one-year gap in new
funding. They therefore agreed to establish a one-year Interim Fund of
approximately $3 billion, to help support IDA operations during fiscal 1997.
These donors also agreed that procurement eligibility for IDA credits financed by
the Interim Trust Fund should be limited to nationals of countries contributing to
the fund and those member countries eligible to borrow from the World Bank.
Projects funded by "regular" IDA resources will not be affected.
Treasury and the U.S. Executive Director's office are working closely with the
World Bank to ensure that the selection of projects for Interim Trust Fund
financing will be random, transparent and open.
Prior to July 1, there will be a random drawing of all IDA projects scheduled
from Oct. 1, 1996, through lune 30, 1997. The resulting list of projects selected
for Trust Fund financing will be disseminated in early luly. Treasury, based on its
dialogue with U.S. private sector leaders, will ensure that this advance notification
occurs. We will also conduct a detailed briefing for U.S. companies during the
next two weeks on the administration of the Interim Trust Fund.
Of the $7 billion in IDA resources expected to be available in fiscal 1997, U.S.
firms will still be eligible to bid on more than 50 percent -- over $3.5 billion -funded from IDA-l0 payments and sources other than the Trust Fund. We have
strongly opposed procurement restrictions and resisted their inclusion in funds in
which the United States participates. Most donors participating in the Interim
Trust Fund confront budgetary pressures similar or more serious than our own.
For them, procurement restrictions are essential to generating domestic and
political support for their participation.
10
•
We are also seeking Congressional concurrence with Administration commitments
of $800 million to IDA-II in each of FY 1998 and FY 1999. This would represent
a total U.S. commitment to IDA-ll of $1.6 billion, or a total of less than half of
the previous pledge to IDA-IO ($3.75 billion). A new U.S. annual commitment of
$800 million to IDA would be the lowest such commitment in nominal tenns since
1980, and the lowest commitment in real terms since 1974.
While this approach has weakened the U.S. leadership role, if this funding
proposal is implimented, IDA will continue and the United States will be able to
maintain an effective role. This approach is also consistent with congressional concerns
and budgetary realities.
Debt Reduction
Several years ago, the global community recognized that over the past two to
three decades many of the poorest countries in the world have accumulated external
debts which would prove impossible for them to service. To break this negative cycle,
and improve such countries' capacity to develop and grow, the United States and other
creditor governments have pledged to reduce debts owed them by the poorest countries
by as much as 67 percent, provided the debtor nation maintains its reform efforts. As in
a corporate workout, for that small group of countries with truly unmanageable debt
loads, the intent is to clear out part of the old debts, and help put these countries back
on their feet -- for their benefit and ours.
To date, we have participated in Paris Club bilateral debt reduction for seven of
the poorest countries whose outstanding debt we were holding. We expect others to
become eligible for Paris Club treatment both this year and next. The budgetary costs of
such programs will vary from year to year, but will remain extremely small, compared to
the debt reduction effected. The Administration has requested $22 million to cover
expected costs for FY 1997, which could leverage as much as $9.5 billion in debt
reduction by all creditor governments. The potential benefits of debt reduction in terms
of growing economies, export opportunities, long-term enhanced political stability, and
hope for the future far outweigh the near-term cost to the United States and others.
Indeed, our failure to act, if it leads to political turmoil and economic crisis, would be far
more costly.
11
For some 10 to 20 of the world's poorest countries, however, even 67 percent
reduction of debts owed to governments will not assure a manageable debt profile. For
them, additional action will be necessary -- including measures to ease the burden of
debt to international financial institutions. A comprehensive approach by creditor
governments and multilateral institutions is therefore necessary. Neither we nor the
multilateral institutions can afford to keep feeding a growing whirlpool of debt. We have
strongly advocated timely action to put debtor countries back on a manageable path.
We welcome the preliminary proposals of the World Bank and IMF, and seek more
specific proposals from them in the coming weeks for our heads of state to consider at
the G-7 Summit in Lyon, so that we can make final decisions as soon as possible.
In summary, U.S. participation in the International Financial Institutions deepens
our engagement in the global economy, opens and strengthens developing markets that
hold enormous prospect for our future economic gro'Nth, and contributes significantly to
our economic and security interests. Whether it is a direct benefit, such as an exportrelated job, or an indirect benefit such as broad growth in our economy as a function of
global growth, every American has a very important interest in vigorous U.S.
participation in the international financial institutions.
Thank you.
DEPARTMENT
OF
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TREASURY (( .~. . . ~. }:
1789~. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1I
ornCE OF PUBUC AFFAIRS • 1500 PENNSYLVANl.\AVENUE, N.W.• WASHINGTON, D.C .• 20220. (202) 622·2960
CONTACT:
FOR RELEASE AT 2:30 P.M.
April 17, 1996
Office of Financing
202/219-3350
TREASURY TO AUCTION 2-YEAR AND 5-YEAR NOTES
TOTALING $31,250 MILLION
The Treasury will auction $18,750 million of 2-year notes
and $12,500 million of 5-year notes to refund $26,576 million of
publicly-held securities maturing April 30, 1996, and to raise
about $4,675 million new cash.
In addition to the public holdings, Federal Reserve Banks
hold $1,726 million of the maturing securities for their own
accounts, which may be refunded by issuing additional amounts
of the new securities.
The maturing securities held by the public include $2,627
million held by Federal Reserve Banks as agents for foreign
and international monetary authorities. Amounts bid for these
accounts by Federal Reserve Banks will be added to the offering.
Both the 2-year and 5-year note auctions will be conducted
in the single-price auction format. All competitive and noncompetitive awards will be at the highest yield of accepted
competitive tenders.
Tenders will be received at Federal Reserve Banks and
Branches and at the Bureau of the Public Debt, Washington, D. C.
This offering of Treasury securities is governed by the terms
and conditions set forth in the Uniform Offering Circular (31 CFR
Part 356) for the sale and iss~e by the Treasury to the public of
marketable Treasury bills, notes, and bonds.
Details about each of the new securities are given in the
attached offering highlights.
000
Attachment
RR-I013
Far press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622·2040
HIGHLIGHTS OF TREASURY OFFERINGS TO THE PUBLIC OF
2-YEAR AND 5-YEAR NOTES TO BE ISSUED APRIL 3D, 1996
April 17, 1996
Offering Amount .
Description of Offering:
Term and type of security
Series
CUSIP number
Auction date
Issue date
Dated date
Maturity date
Interest rate
Yield .
Interest payment dates
Minimum bid amount
Multiples .
Accrued interest
payable by investor
Premium or discount .
$18,750 million
$12,500 million
2-year notes
AE-1998
912827 XS 6
April 23, 1996
April 30, 1996
April 3D, 1996
April 3D, 1998
Determined based on the
highest accepted bid
Determined at auction
October 31 and April 30
$5,000
$1,000
5-year notes
H-2001
912827 X6 4
April 24, 1996
April 3D, 1996
April 3D, 1996
April 3D, 2001
Determined based on the
highest accepted bid
Determined at auction
October 31 and April 30
$1,000
$1,000
None
Determined at auction
None
Determined at auction
The followinq rules ap~lv to all securities mentioned above:
Submission of Bids:
Accepted in full up to $5,000,000 at the highest accepted yield
Noncompetitive bids
Competitive bids
(1) Must be expressed as a yield with three decimals, e.g., 7.123%
(2) Net long position for each, bidder must be reported when the
sum of the total bid amount, at all yields, and the net long
position is $2 billion or greater.
(3) Net long position must be determined as of one half-hour prior
to the closing time for receipt of competitive tenders.
Maximum Recognized Bid
35% of public offering
at a Single Yield
35% of public offering
Maximum Award .
Receipt of Tenders:
. Prior to 12:00 noon Eastern Daylight Saving time on auction day
Noncompetitive tenders
Prior to 1:00 p.m. Eastern Daylight Saving time on auction day
Competitive tenders
Full payment with tender or by charge to a funds account at a
Payment Terms .
Federal Reserve Bank on issue date
2
The second opportunity for advancing L.S. economic interests in the global
economy is to make the international financial institutions and the international financial
structure as modern as the global economy and the markets, to prevent and deal with
future financial crises. This is an adjustment of historical importance with regard to the
institutions. The President began the process two years ago in Naples, and then outlined
an extensive set of initiatives which were adopted by the G-7 at the Halifax Summit.
While these measures won't all take effect overnight, they are very real and very
significant.
During these meetings, we expect important progress in several areas:
•
The IMF will adopt strong disclosure standards to help markets better anticipate
and thus avert financial crises.
•
Participants in discussion to enhance the General Arrangement to Borrow have
reached agreement on a set of broad principles to guide the establishment of new
arrangements to borrow.
•
The G-IO will adopt a report on the resolution of sovereign liquidity crises with
important recommendations to reduce the expectation of official finance, and
encourage private investors to pay more attention to risk.
•
Financial supervisors are making real progress toward identifying ways to
enhance cooperation in the supervision of global financial markets and the
supervision of the major active in those markets.
•
The Development Committee, I believe, will adopt an important report on
improving the effectiveness of the development banks and thus increase the return
on our investment in these key institutions.
•
The G-7 will call on the IMF and World Bank to outline more specific proposals
for reducing debt owed the multilateral institutions by the poorest countries.
These steps represent a hard-headed, realistic approach in support of important
long-term U.S. interests.
It clearly will be three days that can make an important difference both for
Americans and the global community, both in the immediate future and in the years and
decades to come.
3
I would note that as part of the G-7 process, we will also be joined by Russian
Central Bank Governor Dubinin and other Russian officials for a discussion of Russia's
economic outlook. As you know, Russia's performance in 1995 was extremely strong. I
have welcomed Russia's 1996 program, which earned the IMF's support under the $10.2
billion extended arrangement, and underscore that if this progress is rigorously
implemented, Russia should reap the real benefits of reform.
-30-
NEWS
TREASURY
OFFICE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W.• WASlDNGTON, D.C.• 20220 - (202) 622·2960
ADV 10 AM. EST
Remarks as prepared for delivery
April 18, 1996
ORAL TESTIMONY OF TREASURY SECRETARY ROBERT E. RUBIN
HOUSE APPROPRIATIONS SUBCOMMITIEE ON FOREIGN OPERATIONS
Mr. Chairman and members of the Subcommittee -- this morning I want tc
discuss our fiscal 1997 request for $1.4796 billion for the international financial
institutions (IFIs). I have a longer statement which I'd like to submit for the record.
The programs run by the'IFls are exceedingly important for peace and prosperity,
and it is enormously in our self-interest that they be ad~quately funded. In area after
area, the IFls have an important impact on Americans, because they directly influence
the growth, development and reform overseas that creates new and growing markets for
our exports, and better jobs and living standards for Americans, and they contribute to
our national security.
Our participation in these institutions is at a crossroads. We cannot unilaterally
set the policies and priorities for the IFIs. We must rely on leadership and persuasion to
advance our development agenda. The reductions made last year are severely
undermining U.S. credibility and leverage throughout the multilateral financial system.
We must honor our international commitments to ensure our continuing capacity to lead,
and forceful U.S. leadership over a period of years has yielded and is yielding large
dividends. At the same time, we must also set priorities when budget resources are
scarce.
We recognize your concerns that we get the most for our investment. We are
presenting a lean funding request, one that honors past obligations and simultaneously
reduces our contributions in coming years to make an important contribution to a goal
we all share, continuing to reduce the deficit.
RR-I015
(more)
http://www /ustreas.gov
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2
We are seeking just over $1 billion for the World Bank group, including $934.5
million to meet our outstanding and overdue commitments to the 10th replenishment of
the International Development Association (IDA), $100 million for the Global
Envirorunent Facility and $6.7 million to meet an overdue commitment to the
International Finance Corporation. We seek $263.7 million for the regional development
banks -- for Africa, Asia, Eastern Europe and the fonner Soviet Union, and Latin
America; $127.7 million for other international financial institutions, and $47 million for
debt reduction programs.
We are also seeking congressional concurrence with a commitment of $800
million to IDA-II in each of 1998 and 1999 -- less than half ocr pledge to IDA-tO. This
amount would be the lowest U.S. pledge to IDA in nominal tenns since 1980 and the
lowest in real tenus since 1965.
While this approach has weakened the U.S. leadership 'role, if this funding
proposal is implemented, IDA will continue and the United States will be able to
maintain an effective role. This approach is also consistent with congressional concerns
and budgetary realities.
Let me add a few words regarding IDA-II and procurement. We are making no
fiscal 1997 commitment to IDA-I1. Other donors, however, did not want to disrupt
IDA's operations by leaving a one-year gap in new funding. They therefore agreed to
establish a one-year Interim Fund of approximately $3 billion, to help support IDA
operations during fiscal 1997. These donors also agreed that procurement eligibility for
IDA credits financed by the Interim Trust Fund should be limited to nationals of
countries contributing to the fund and those member countries eligible to borrow from
the World Bank. Projects funded by "regular" IDA resources will not be affected.
Of the $7 billion in IDA resources expected to be available in fiscal 1997, U.S.
finns will still be eligible to bid on more than 50 percent -- over $3.5 billion -- funded
from IDA-IO payments and sources other than the Trust Fund. We have strongly
opposed procurement restrictions and resisted their inclusion in funds in which the
United States participates. Most donors participating in the Interim Trust Fund confront
budgetary pressures similar or more serious than our own. For them, procurement
restrictions are essential to generating domestic and political support for their
participation.
It must be remembered, in looking at this situation, that there are enormous longterm benefits to American firms from the growth to which IDA contributes and the
exports we are able to provide as a result of that growth.
3
I've addressed debt reduction in detail in my written statement, so I'll just say that
the aim is to assist the poorest countries to break the cycle of debt and help put them
back on their feet. We welcome the preliminary proposals of the World Bank and IMP,
and seek more specific proposals from them in the coming weeks for our heads of state
to consider at the G-7 Summit in Lyon, so that we can make final decisions as soon as
possible.
Mr. Chairman, it is fair to ask, what have we gotten for our participation in these
institutions?
Twenty nations that two and three decades ago were in dire condition now have
graduated from concessional lending and are among our fastest growing markets -Korea, Indonesia, Thailand and Turkey to name a few. Our 1994 exports to those 20
nations totalled $48 billion. Forty percent of all our exports go into developing
economies.
The IFIs are rebuilding shattered economies -- in Bosnia and the Middle East.
In Latin America, with IFI guidance and support, there is a new consensus to
pursue market-based economies. Democracy has spread, and U.S. commercial interests
have thrived. That would not have happened without IFI support.
In Eastern Europe, the fonner Soviet Union, and Indo-China, the institutions
support the transition from communism to free market democracy.
And, as Secretary Christopher discussed with you last month, the institutions
further our key foreign policy goals by directly contributing to economic and political
stability in areas important to our national security. They are the international
community's economic tools for times of crisis. And they are tools to create growth,
open and integrate markets, and address the global problems of endemic poverty,
environmental degradation, mass refugee flows, and unsustainable population growth
which are too large for anyone nation to address alone.
We agree with Congress that these institutions, for as much good as they are
doing, have their shortcomings, and we are using our leadership to remedy that and
ensure the best return on our investment. The IFIs have been extremely responsive to
an ambitious, U.S.-inspired refonn agenda. While more must be done, significant
progress has been made to: improve lending quality and portfolio performance;
strengthen efforts to promote private sector development; deepen support for poverty
reduction; improve primary education, particularly for girls; improve primary health care;
increase transparency, accountability and public participation; integrate environmental
considerations into development programs; and improve management efficiency and
institutional responsiveness.
4
Mr. Chainnan, the work of the international financial institutions has·a broad
impact. Every American, directly or indirectly, is affected by these institutions and has
an interest in continuing to support then.
In the past year rve seen where the impact on America bas its roots, and that is
at the grass roots level overseas -- where economies are developing and markets being
opened.
'
In a shantytown in Brazil last year a woman told me that before the World Bank
began to install a sewage system and build a community center, she would sit up nights
to make sure rats did not hann her children as they slept, and she feared for their future.
Now, she and the children sleep nights, and the children go off in the morning for
schooling and training. She has hope not just for her children's future, but for her own.
I saw families in a poor town in India who are raising their living standards and entering
the consumer class with a bank-sponsored water and soil conservation program. Last
month, a woman in a poor suburb of Manila told me how a small loan from a
cooperative backed by the Asian Development Bank -- a loan of only about $200 -- is
helping her family build a business. She came to tell me this -- even though her father
died just hours earlier -- because she wanted not just me, but you to know how lives are
being changed for the better.
These are the actions that, collectively, develop economies and open and build
markets for America, spread democracy and encourage stability, and through all of this,
further our national security. For all these reasons, it is imperatively in the interest of
every American that there be vigurous U.S. participation in the international financial
iIlStitutioIlS.
Thank you.
-30-
u.s. TRADE POLICY WITH JAPAN:
ASSESSING THE RECORD
An Update
The Council of Economic Advisers
U.S. TreasW)' Department
April 10, 1996
President Clinton has made opening the Japanese market a key priority.
One month after taking o"ffice. President Clinton set fanh a simple but powerful mission
statemcnt to guide trade policy: "We must compete, nor retreat." At the same time. he made
clear that his t:rade policy would not be business as usual. "We will continue to welcome foreign
products and services inID our markets but insist thal our products and services be able to enter
theirs on equal tenns." Since th!t time. President Clinton has been unwavering in his
commitment to secure tough but fair trade agreements .- and to make sure that those agreements
are enforced.
President Clinton has made the economic relationship with Japan a model for his
distinctive approach to trade policy. Accordingly. one of his first tra~ initiatives was to
establish a "framework for a new ttadc relationship with Japan." In the 33 months since the
Framework Agreement was signed. the Administration has concluded more trade agreements with
Japan than any previOUS administration. And in keeping with the President's commitment to
America's companies, workers and farmers. the Administration has followed through on
implementing. reviewing. and enforting these liJ"CCments. The President's consistent application
of the principles he laid out in his first months in office is now producing convincing results.
1
U.s. exports to Japan in targeted sectors are growj,,~ rapidly.
The Clinton Administration has negotiated 20 trade agreements with Japan. including
Uruguay Round, Framework. and other bilateral agreements. Th: agreements cover priority are!lS
from general market access and deregulation. to intellectual property rights protection for U.S.
goods and services, to important services sectors such as insurance and construction. to specific
goods sectors such as automobiles and apples. The trade agreements are "win-win", yielding
lower prices and higher quality for Japanese purchasers and consumers and increasing market
access for U.S. companies, workers and farmers. Free and fair trade has long been recognized
as the basis for increasing living standards for all trading partners.
The Administration's Strategy is results-oriented. The agreements include objective
criteria for measuring progress and time1ines for review of the agreements. The Administration
has placed a high priority on enforcing the agreements, which is helping to ensure they deliver
real benefits for American companies, workers, and farmers.
u.s. EJporu 10 .I. pen In s.ctOfl Cov~ by Tnd. Agreern.fltl Are
Growing .t .n Ev.n FUlef PI~ Thin ThOH In Other Seelora
••
The Administration IS
strategy IS showing positive
results. In the goods sectors
covered by our Uruguay Round,
Framework, and other bilateral
agreements, U.S. exports to
,.
Japan have
I,
gro~
over 8S
percent since this Administration
took office. Growth in exports to
'I..
Japan in these sectors is 3 times
greater than growth in other U.S.
expons to Japan -- which has also
been strong. Indeed, growth in all
U.S. exporu to Japan of 34
percenr has been over twice as
I··
.--.--
great as growth in U.S. expons
to
the European Union. Total U.S.
expons to Japan reached a record
$64 billion in 1995.
The July 1993 Framework Agreement is the cornerstone of the Administration's trade
policy with Japan. The Framework focuses on ill three aspects of the economic relationship with
lapan--macroeconomic. structural and ICctoral··and it establishes guidelines for review of the
agreements to ensure that the desired results art achieved. TI-Js strategy is now paying off: in
the goods sectors covered by the Framework Agreement alone, U.S. exports to Japan have
risen UO percent since the Agreement \US si~ed •• four times as fast as other U.S. exports
to Japan.
2
".s. businesses and workers are achieving successes in sectors covered by
Clinton Administration trade agreements.
Autos and Auto Parts: Since the auto and auto parts agreement was signed in August 1995.
U.S. auto and auto· parts expons to Japan have risen over 35 percent, totalling $3.8 billion in
1995 -- already exceeding exports to the European Union. In 1995. the Big Three and Japanese
transplant producers exponed over 140,000 U.S.-made vehicles to Japan, up nearly 40 percent
from 1994.
Recognizing that U.S. auro makers could expand their sales if given adequate opportunity to
display their products in Japan, the Administration targeted access to dealerships as an irnponant
part of the August 1995 auto and auto pans agreement Since the agreement was signed. the Big
Three U.S. automakers have added 30 high-quality. rugh-volume dealer outletS in Japan. but more
progress is required.
Deregulatory actions in Japan are beginning to lead to more sales for competitive U.S. suppliers
in the auto parts aftennarket. U.S. parts suppliers \Iwill now have the opportunity to sell their
products through Japan's major auto pans retailers and service stations. Such access will
dramatically increase U.S. auto parts sales to Japan: For example. as result of opportunities
created by the agreement. Tenneco Automotivc, which has made efforts to break into this market
for years. expects to expand its sales of shocks and struts in Japan from me existing level of
70.000 units per year to 105,000 in 1996.
Telecommunications Equipment: Since two agreements on telecommunications procurement
were signed on November 1. 1994. U.S. exportS of telecommunications equipment to Japan have
increased nearly 50 percent. to S1.7 billion in 1995. This is almost twice as fast as the growth
of U.S. exports of telecommunications equipment to the European Union, albeit starting from a
lower base.
Cellular Telephones: After years of stalled negotiations, the Clinton Administration concluded
an agreement in March 1994 with Japan to open the ceUular telephone market in the TokyoNagoya area, the largest population center in Japan. Since the agreement was signed and the
Japanese Government instituted deregulatioD measures. subscribers to the Nonh American
designed system have grown from 22.000 to 600.000. Mororola., which cried unsuccessfully for
years to break into this market. provicks the bull: of the equipment to build and maintain this
system. with sales values in the hundrcxh of millions of dollars per year. Greater competition
in the region has also benefitted Japanese consumers .- they now not only have greater choice
but also enjoy lower prices for cellular phone services. Initiation and monthly service fees are
now one-third the previous rates.
3
Medical Technology: The Clinton Administration concluded a Framework Agreement with
Japan covering public sector procurement of medical technology (such as MRI machines and cr
scanners) on November 1. 1994. A review of the agreement in July 1995 determined that the
Japanese Government has made good progress toward implementing the transparent and open
procurement procedures called. for in the agreement Since the agreement was signed, U.S.
exports of medical technology to Japan have increased over 35 percent, to nearly $2 billion in
1995.
Rice: The Dinton Administration targeted rice in the Uruguay Round negotiations. Although
American medium.grain rice has been highly rated on quality by the Japanese Food Agency,
imported rice was vinually banned in Japan for decades. With the successful conclusion of the
Uruguay Round. Japan finally opened its market to imponed rice and American rice has been
well·received by Japanese consumers.
.
In 1993. a major failure of the rice crop in Japan led to the first taste of American rice for many
Japanese consumers. Since that time, U.S. farmers have sold $287 million of rice expons to
Japan. marc than the previous 25 years combined. And although Japan's rice crop subsequently
recovered. U.S. expons of rice to Japan in 1995 totalled $31 million.
Apples: The Clinton Administration wgeted apples as one of its first bUateral trade initiatives
with Japan. and an agreement was concluded on September 13, 1993. Since that time. the
Administration has continued to work with Japanese officials to increase the number of U.S.
apple growers and apple varieties certified lO supply the Japanese marlcet These sustained effons
are beginning to payoff: where U.S. apple exports to Japan were once banned. apple expons
approached S7 million in 1995. Meanwhile, imports of apples have brought 10wer prices to
Japanese consumers, which will help increase ove:rall apple sales in Japan.
Copper: The Clinton Administration targeted copper in the Uruguay Round negotiations. Since
the Uruguay Round Agreement was signed, U.S. expons of copper to Japan bave increased by
over 80 percent, to $350 million"in 1995. The United States sells 1.5 times as much copper to
Japan as to the European Union. and U.S. exportS of copper to Japan are growing faster than
those
to
the European Union.
Chemicals: The Ointon Administration targeted chemicals in the Uruguay Round negotiations.
Since the Uruguay Round Agreement was signed, U.S. eltports of chemicals to Japan have grown
nearly 2S percent. reaching $2.8 billion in 1995.
Fl~t
GJass: Until the flat glass agreement was signed in January 1995. Japan's $4.5 billion
market for flat glass had been dominated by an oligopoly of 3 japanese producers. U.S. expons
of flat glass to Japan doubled in 1995 to nearly 5 million square meters.
4
Japan's market is also opening up more broadly.
Realizing that progress in individual sectors would depend in part aD addressing overall
imbalances, the Administration targeted macroeconomic and sttUcruraI adjustment in Japan as
important aspects of the Framework agreement On these fronts as well, the results have been
positive. Japan's imporu have been gro,wing rapidly. This strong import growth is especially
encouraging given low overall growth in Japan and the r~ent depreciation of the yen against the
dollar. Indeed. recent evidence'suggests Japan may be experiencing a structural shift towards
greater acceptance of importS.
Haw GlIne~ ... ~et Sharv In J.a
100
uo
ICiD
8
,
•
to
J .,
'lIZ
__ ......
lID
_~
,_
........... 4_..--.
I_
By the last quarter of 1995. the Japanese current account surplus had fallen below 2
percent as a share of the economy. Moreover. Consensus Ec{)l!.l)",ucs forecasts continued
reduction in Japan's current account surplus from S110 billion in 1995 to S88 billion in 1996 and
$69 billion in 1997.
JI PI"" C\I"."t Account SIJ'1'l us Hat F. tie" •••
p.rcent of OOP to Itt L,oM.ll.....1SInce 1991
.,r-------------------------------~
•
tJU-~,_----~--,---~~--,~-----~--,-~~
c.,.._ ...... _
•• -
.. ~
5
And the bilateral trade deficit with Japan has begun to decline.
Despite slow growth in Japan during 1995, U.S. merchandise expons to Japan grew five
times faster than our imports from Japan. Overall. u.s. merchandise exports to Japan grew 20
percent in 1995 alone. As a result, the trade deficit with Japan declined by nearly 10 percent-the first decline in five years. Trade in autos accounted for half of the improvement in the trade
deficit: U.S. aura expons to Japan increased by nearly 40 percent while impons fell for the first
time in a decade.
The improvement in the
trade deficit in pan reflects
economic recovery in Japan.
While we welcome the
The Blletaral Deficit H... Fallen by 10 Percent
improvement in the bilateral
deficit, it is important to note that
the bilateral deficit is not a
scorecard for trade policy. The
goal of our trade policy is to
improve the economic well-being
of Americans by expanding trade.
I
·ttI
The recent success of our Japan trade policy parallels improvement in overall
U.S. competitiveness.
Our strong export perfonnance in general and to Japan in panicular is attributable to a
variety of factors, in addition to the numerous mw! opening agreements concluded during this
Administration. The President's overall C(:onomic plan. with its emphasis on deficit reduction
and investment, has led to strong sustAined growth with low inflation. This has encouraged
slfOng growth in U.S. invesunent and employment. a.nd helped to strengthened U.S. business
confidence and the fundamental competitivcneu of U.S. industries and workers. The economic
results have been impressive by any measure: during the last three years, the American economy
has produced 85 million new jobs; the fedcnl budict deficit has been cut nearly in half; home
ownership is at a 1S.year high; the combined rate of inflation and unemployment is the lowest
in 27 years; and an all·time high of almost 2 million ncw businesses have been created. U.S.
expons have surged, rising 31 percent since the beginning of the Administration, and the World
Economic Forum has ranked the United Sr!le1 number one on competitiveness for two years in
a row, up from number 5 in 1992.
For MI)It
uV()frt\l1llCft. plt4U COrtIacl
6
Miclvk Jolin a1 202·395·5084.
DEPARTMENT
OF
THE
TREASURY fl)
--------
TREASURY
NEW S
OFFICE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C. - 20220. (202) 622-2960
TRANSCRIPT OF PRE-G-7 PRESS BRIEFING
WITH TREASURY SECRETARY ROBERT E. RUBIN
APRIL 18, 1996
For press releases, speeches, public schedules and official biof!Japhies. call our 24-hour fax line at (202) 622-2040
ffiuTED STATES DEPARTMENT OF TREASURY
PRESS BRIEFING
Page 1
UNITED STII TES DEf>ARTMENT OF TREASURY
PfL~~
j.IIEFING
THUR~DAY. APRIL 18.1996
2:30 o'clock pm ..
Page 2
III SECRETARY RUBIN: Good
afternoon. Welcome (l) to treasury. Well.
as you all know, in the coming 13\ days we
will have G-7 and G -I 0 meetings, as well
as 141 the Interim and Development
Comminee spring meetings.
(S) The United States is now an integral
pan 16) of a global economy. What
happens abroad is of 171 enormous imponance to our economic interests and
our 181 national security. and that's what
these next few days 19) are about.
1101 We were reviewing the agenda over
the last Ill) few days. as we got ready for
this meeting, and the 112) thing that struck
me more than anything else is how [13)
rich in content this year's meeting is this year's (14) meetings are, counting all
the different meetings. II S) ~7, G -10, the
Interim Development Comminec's.
[16) A lot of these issues are not the kind of
(11) issues that create headlines or are
enormous news on 1181 any given day. but
are indeed. without question. they (191
are of far greater importance over time
to our country [201 than an awful lot ofthe
things that attract far more (211 anention
on any panicular given day.
1221 The issues we'll be discussing affect
Page 3
America's economic interests, and
thereby also our (2) national security
interests, in two fundamental ways:
[3) I, we will be discussing the question
of [4) growth. At the G-7 meeting particularly we will be IS} discussing growth
in the industrial countries, as well (6] as in
the developing transitional economies.
[7) In the industrial countries, we'll be [81
focusing on the issues that each of us
faces. [n [91 Japan. the growth has begun
again, but clearly it's (10) very important
that there be focus on continuing (11)
poli~;es that will sustain growth going
forward.
[121 In Europe, growth is very slow, and
clearly [B) it's in the interest of Europe,
but also the rest of (14) the world, that
Europe begin growing again. In that liS)
respect, we very much welcome the
actions of the r16) Bundesbank this morning.
[17] The United States has been criticized
in (18) these forums for many, many years,
in the '80s and [19) early '90s, for not
dealing with our fiscal problems (201 for
the effects that had on this country and
the rest [211 of the world.
[22[ I can cemember in 1993,1 went to the
To';':,o
III
April 18, 1996
Page 4 1411ust as disclosure is at the hean of the
(51 American regulatory system, I think
[11 G-7 meeting, the President was able to
say, "We have 121 now put fonh a program that disclosure 161 can be at the: hean.
much more effective regulatory I") SYS'
I that really begins to address 131 this very
tem,
in the international markets.
serious economic issue in the United [41
181
Participants
in discussions with reo
States."
spect
to
[9( the GAB. the General Agreem·
15l Today I can go to a G-7 finance
ministers 16] meeting and we have the e nts to Borrow. have 110] reached agreem, lowestdeficitGDPratio in!1/ theG-'.and enton broad principles. Now we need to
(III cominue and deal with the variOllS
our deficit is heading even lower. So we
r technical issues, [121 so that can
he
[81 have done - we have addressed the
brought
to
conclusion.
issue the rest of [91 the world told uS we
needed to address,and that puts [101 us in r13) Third, [he ~ IO wiJl adopt a repon lJ n
a very strong position to discuss with the the (141 resolution of sovereign liquidin
other 1111 nations the issues that face crisis.And Idon't (lSI want to getaheadof
them, just as they [12] deserve to discuss that repon, but let me say that [16] I dn
with us the issues that continue to [131 think that what you will sec: are rt'·
conunendations (11) to reduce the ex·
face us.
pectations
amongst private tenders [llll
1141 The other major focus ofthese next
with
regard
to official finance, and to
few (15) days will be in the national
encourage
[191 private investors to pav
financial institutions 116) and on making
those institutions as modern as the [l"1 more anemion to risk and to [20} the way,
global markets and the global economy. I of dealing with risk.
(111 Founh, the xxx BIS and IOSCO art'
believe (he [\81 adjustments that are
making [22) real progress towards en·
going on in the national 1191 financial
institutions today are of an importance hancing cooperation.
Page 7
that [201 can be fairly called historic.
III regulatory cooperation, both with
[21) Just as the economies of the world
have [22] changed so dramatically and respect to the [21 markets and with
respect to the firms that operate in (31 the'
have globalized with great
global economy and across national
Page 5 borders, (4) regarding supervision.
(I] speed, so we must have institutions
i~) 5th, the Development Committee will
that are [2) conunensurately modern.
adopt a (61 repon that's already bew
131 This process began two years ago, released on improving the [7) effec·
some of [~I you may remember, in the tiveness of development banks, barh
Naples G-' meeting. Then we (5) went to with respect (81 to how they use their
Halifax, where the President proposed, resources and with respect to 19) the'
~nd the [6\ leaders adopted.a wide range
manner in which they operate. As YOll
of initiatives.
know. that 1101 focuses on investing more
[7] None of these were easy to do,
in the environment. on [III investing in
becau~e you [8) have to deal with a very
education,on investingpanicuJarly with
large number of countries. (9) Each of [121 respect to women in less developed
those countries have their own political countries,and then [13) with regard to the
(10) substantive issues. But a lot is hapoperations of these institutions, [111 trans·
pening.lt 1111 docsn'thappenquickly,but parency. and other related maners.
it is happening.
1151 And finally. the G-7 will caU on tht'
(12] In the aggregate of these four meetIMF [161 and World Bank to contimlt'
ings (13] that we will be having with developing their proposals. (171 that is to
respectto the 114) internationalfinanciai say the IMF and World Bank proposals.
institutions, cover the [lSI following six with I \8) regard to reducing debt owed to
issues:
the most lateral [191 institutions. It's our
view that the poorest 1201 countries in
1161 1, the IMF will adopt strong disclosure (17) standards, to help markets some cases will need not only bilater.tl
that anticipate and thus (lSI avert fin- Ill} debt reduction. but also IMF anti
World Bank or sister [22) bank deht
ancial crisis.
reduction in orderto beonaviable basis
[191 I don'tthink there's any qllcstion that
(20) these disclosure standards had been
Page 8
in effect at the [21] time preceding the lIlYouputallofthesetogetherandwhat
Mexican financial crisis, that the [22) you [2) have are an array of initiatives of
global investors would have been affec- enormous 131 importance to our St It·
ted by them, the
interest. our economic 11] interest. our
Page 6 national security interest.
II] tesobona buildup would have been
IS] Let me say, we will also be joined. as
farless, and that 121 situation never would we [6) have been for now quite somt:
have reached the dire straights [31 that it ' period of time, by [11 representatives of
did reach.
.he RU!lsian Government,at the end (8) of
.~~---------------------------------------------
April 18, 1996
UNITED STATES DEPARTMENT OF TREASURY
PRESS BRIEFING
our meeting, G-7, we will be joined by
that.One,! think we lUI need to continue
always do our willingness to work toge·
the Russian 9[ Central Bank Governor
to he competitive and to energize II II
ther, when it's 119) appropriate to do so,
other Russian officials, for a [IO[ brief
energetic, we pursue expon oppor\ .. _. respect to currency. Yes, 12t!j ma'am.
discussion of the economic output in
tunities to Japan: IISI and we need to
[211 CORRESPONDENT: ~1r. Rubin, you
Russia
continue to work with the Japanese 1161
were quoted ~221 as saying yesterday that
Government as they continue to open
1111 Russia had a good 1995. They adthe economic fundamentals in
theIr markets, I PI which is of benefit to
opted a [12J 1996 program which was
Page 13
both Japan and the other [IBI countries of
sufficient to get them a three [131 year
the world, and ourself, Yes, ma'am,
[II the U.S currently are about run. Are
extended arrangement with the IMF,
these economic [21 fundamentals now
which we in [141 the United States very
[191 CORRESPONDENT: Mr, Secretary,
fully reflected in the value of the :31
strongly supported.
you said you [201 wouldn't speak ahout
dollar?
yen-dollar levels,
IISI It isourbeliefthat if Russia continues
141 SECRETARY RUBIN:That's what I
[161 on the reform path that they've been
[211 SECRETARY RUBIN:Correct.Ordoldidn't 1')1 comment on.
on, that they are [171 now poised to begin
lar-yen [221 levels.,~_ _ _ _ _ __
growing again and to reap the [181
Page 11
[61 CORRESPONDENT: Would you like
benefits of reform_
, [II CORRESPONDENT: And you did
to expand on l"'I that a little.
119J Let me close by saying that these are
omit to say [2J that you would be dis181 SECRETARY RUBIN:No. I'll expand
:20J clearly three days that will deal with
cussing currency questions at the [3J G-7
on the [91 fundamentals. I think that we
issues of great \21 J importance to this
meetlflg, although the other finance
have come a long wayin IIOJ(he lastthree
country and countries around the [221
ministers did [41 say that they would.
years. The private sector has done a [IIJ
world, could make a real difference both
i good job in terms of beginning to
151 SECRETARY RUBIN: Well they unbecome competitive. [Ill We brought
for Americans
doubtedly
161
will,
then.
down the deficit by 50 percent - actually
Page 9
[71 CORRESPONDENT: One would as[1.11 we are helow 50 percent as a
III and the global community.
sume that you [111 would be there,
percentage ofGDP-and [14!I think we're
[21 This is pan of an ongoing process that
191 SECRETARY RUBIN:Yes, I will be
very much on the right path going [lSI
we [31 need to focus on and devote '
there, I [101 have to chair the meeting, so I
forward. And I think ourselves to, year in and [1J year out, in
will
without
doubt
be
[III
there
161 CORRESPONDENT: Does the dollar
order to deal effectively with the issues
[121
CORRESPONDENT:
~1y
question
re[1"'
1 appropriately reflect that?
151 of the global economy that we are
ally
is,
[UI
there's
been
some
discussion
[181
SECRETARY RUBIN:That I WIll not
now all pan of.
about
levels
at
which
the
:
HI
dollar
comment
[191 on. Yes, sir?
161 With that, I'd be delighted to respond
would be too high agalOst the yen. Do
[201 CORRESPONDENT: On the issue of
to 171 questions. Way in the Back.
tkbt [211 relief. could you talk about the
181 CORRESPONDENT: Mr.Secretary, we I you [1 SI expect that you will be discussing this type of thing 1161 at the
U.S. position on the [22] joint IMF-World
saw a [91 trade deficit with Japan last year
meeting?
Bank
effort to grant relief? Some of
of $59 billion, [1O[ which while down
[
til
SECRETARY
RUBIN:
Well,
I
was
jestPage 14
from the preceding year, was still [III the
ing a [181 little bit. There are always
largest bilateral deficit of any country.
discussions about [191 matters like _ when
[II the developing countries believe that
[121 Has the recent appreciation in the
the World Bank 12\ and the IMF should be
finance ministers get together 121)1 they
value of 1131 the dollar against the yen,
have an irresistible urge to discuss exdoing more. Is the U.S. of that [31 view'
does that help the U.S. to [141 reduce its
change 12l] rates.
111 SECRETARY RUBIN: We are of the
trade deficit with Japan?
[22J But my view with respect - what I sa y : view, and [s\ have been of the view, that
IISI SECRETARY RUBIN:Letmegiveyou
with
there are countries, the [6J poorest couna [161 two-partanswerto that, and then I'll
tries, that some of the poor countries [il
Page 12 I
give you the [PJ third part, which will be
have a debt load that simply is not
[lJ respect to the dollar is always the
the piece that I won't 118J respond to.
sustainahle, and [81 in order for ~hem to
same, but it is [21 the policy of the United , be viable, there has to be debt [91
[191 What I won't respond to is what I
States Government, which is [,I we
reduction.
think the 1201 end dollar relationship
believe a strong dollar is very much in I [101 We believe that that has to be done
ought to be.So I'll give you [21J my third
our [4[ national interests, and that we will
through I111 the Paris Club, which is to
pan first.
continue to IS} cooperate with the other
say official government [12\ debt; and be
[221 But I do think the question
of
---nations, with G-7 and [61 elsewhere in the
done through the London Club, which IS
Page 10
world where appropriate.
11.'1 private debt. But an imponant piece
·11 competitiveness of American industry
171 CORRESPONDENT: Could I followof that in some [14\ of these countries is
.= leave aside [21 currency rate for the
up on that;
the multinational withdrawal II~I inmoment - is obviously a very 131 Imstitution of debt.
'~I SECRETARY RUBIN: You sure can.
portant focus of public policy. Because
[16\ We think that should he done with
.91 CORRESPONDENT: Do you expect
of the [4[ effors of both the private sector
the WJ resources, or at least predomthat
there
[101
will
be
such
consensus
on
and the public [5} sector, if you look at
inantlywith the 1\8} resources of the IMF
how high the dollar should IIIJ go?
American industry today, it is 161 comami the World Bank, It's not [19! been the
petitive across a broader range of in[121 SECRETARY RUBIN:No, I don't
position that that should require [201
dustries, [7J something which was certhink that [131 there will be discussion of
contributions from the donor nations, or
tainly not true seven, eight, [8] nine years
level, I really don ·t. I [141 think what there
the member 1211 nations, I should say,
ago. I think: a great deal has been [91
will be discussion of are our [15! econoexcept those that choose [22] voluntarily
accomplished with respect to the commic policies and the fundamentals of
(()col1tri~_te_ to_ th~££\lrpos_~.__
, these [161 various countries, and I think
petitive pOSition [101 of (his country.
Page 15
that's what the focus WI will be on. I'm
[III In terms of the trade deficit with
sure
that
we
will
reiterdte,
as
we
[l:3J
ill
CORRESPONDENT:
So
in
other
Japan,l (121 think there are two pieces to
1
UNIThD :HATES DEPARTMENT OF TREASURY
PRESS BRIEFING
words, you're [2J saying that the U .5. did
not support enhancing the [3J Naples
tasK 01 Lontrolling greater debt relief on
a [4J bilateral basis; is that what you're
saying?
certainly has done. And I'm sure we '1l1~1
have discussions at these meetings about
where they [81 think theirvarious ;'pproaches are heading. I think I [91 rather limit
myself to that.
1101 Yes, maam. way in the back.
[51 SECRETARY RUBIN: No. I'm saying
that the [61 United States supports bilateral debt relief, but it 171 also supports
debt relief by the IMF and the World [81
Banle
[91 What we do not support, and neither
does 1101 anybody in the G-7, to my
knowledge - what we do 1111 support is
the World Bank and the IMF doing this
with 112J theirowe resources,ratherthan
calling on the member 113J countries to
donate additional resources for that 1141
purpose. Yes.
1111 CORRESPONDENT: Mr. Rubin, you
said that 1121 you welcomed the interest
rate cut by the Bundesbank 1131 today,do
you see further room for further interest
[1·1J rate reductions in the future? And
second question, i151 if I may, the IMF in
its world economic outlook report 1161
also mentioned the high fiscal debt
accrued by the 1171 industrialized countries and mentioned that that 1181 was the level of debt was unprecedented.
! 191 Will you also be discussing that also in
,
1201
viewofthe upcoming problems with
1151 CORRESPONDENT: Secretary
tensions and 1211 helping in Asia, so forth'
Rubin, will the 1161 cheap yen and the bad
1221 SECRETARY RUBIN: Well, that's a
loan problems injapan come up [171 in
the biIaterals with your japanese coun- I
Page 18
terpart? 1181 Have they done enough to
III complicated question with a lot of
deal with those problems, as [191 well?
pieces to it. But, 121 yeah, I have no doubt
1201 SECRETARY RUBIN:Well,
clearly,
the [21J Government of japan has an
important thing to deal 1221 with. As I said
before, and I'll say it again, I
.~~~~--~~~--
Page 16
IIJ think there was a point many, many
months ago when the 121 japanese government crossed the bridge. They clear- ,
Iy 13J internalized the need to deal with I
these issues, just [4J aswe at some point in
our history years ago needed to 151 deal
with the S&L problem.
[6[ The question of how they do that is I
really [7J a matter for them, not for us. But
I'm sure that [8J there will be some ,
discussion of the measures they're 19J I
taking, what their plans are. Yes, sir'
I
1101 CORRESPONDENT: Along with the
yen problem, III J recently the lower
house of Japan passed their budget [12J
after many months of struggling. You I
have been 113J calling for greater trans- I
parency in the - in the 114J Japanese
resolving of this problem. One of the
things [lSI that you have been asking for,
or have been [16J suggesting, is that there
is greatt:r transparency in [17J the system.
'18J What they came up with to solve the
problem 119J in the latest budget, do you ,
think that reflects your 120J request for
more transparency'
1211 SECRETARY RUBIN:Well, I think
I'm going 122J to keep out of the business
of commenting~n thei~____ .___ ._
Page 17
III particular policy proposals, because I
think that's [21 the appropriate thing to ,
do. But I'll just reiterate 131 what I said a
moment ago, I think that part of the 14J
baltle is recognizing you've got a problem and [SJ commiting to deal with it,
which t'1e japanese 16J Government
BI<X.'f{ COURT REPOHTJN{7
April 18, 1996
you think about where [131 things are
today, the tesobonos have been elim
mated, 1141 the reserves have increased
from 6 billion to about 151151 billion-1m
talking in dollars - someplace in that .1(·
area.
WI There clearly are many issues till'
banking [181 system need to dealt wull
but they are being 1191 addressed. We
think that they've had quarter reported
[201 or least one quarter maybe two - 1
mean,two quarters 121J now at leastthnt'
two quarters.
1221 We believe there will be solid groW1h
in
Page 2C
[IJ 1996. I don't want to comment on .1
specific number, 12J but solid growth III
I 996.0bviouslythere are issues 1311efi tIl
deal with - a lot of issues left - I don't; i
want to say "a lot of issues," let me say .I
lot left [51 to dO,and I think it's absolute"
critical that [61 Mexico remain on tilt'
reform a path it's been on.
I") But I will tell you,1 think that Presidel1t
we'll be discussmg fiscal 131 situations in
181
Zedillo, Minister Ortiz, and the other\
the various countries. There's the 111
have
just -191 been an enormous politiClI
whole other separate question which
courage in undertaking the 1101 ven
you correctly 151 referred to which is the
tough program that they've undertaken
underfunding of future 16J pension operand
I1I11 think it's very gratifying to set'
ations.
that begin to pay 1121 off in a relative h
171 I'm sure we'll be discussing the fiscal
short period of time.
[81 conditions with various countries and
[131 CORESPONDENT: Given that next
their plans, 191 Maastrick and all of the
:
week
is the 114J experation of yet another
related issues.
continuing resolution. Does 1151 the lack
[101 In terms of future actions by the 11I1 I
of a budget for the Federal Government
Bundesbank, I think I'd rather restrict
and a 1161 lack of a budget plan for tilt'
myself to [12J saying that growth in
next several years, have 1171 an effect on
Europe obviously is very slow. [131 It is
the economy for 1996?
very much in the interest of Europe and
1181 SECRETARY RUBIN:That's a ven
the rest 114J of the world that Europe
good [191 question.Idon'tthink so.I think
began growing again.
we can point to [20J a very solid record {ll
[151 What policy measures they take to 1161
accomplishment
on deficit 1211 reduct
accomplish that purpose is something
ion.
As
I
say,
the
1993
deficit reduction
they're going to [17J have to - is really
plan,
[22J
which
was
a
tough
plan, which
appropriate for them to deal (18J with.
was criticized by a lot
1191 Yes, sir?Well, I was actually talking [201
Page 2'
about your neighbor, but; okay'
[I
J
of
political
advisors
to
the
President
1211 CORRESPONDENT: Mr. Secretary.
the IMF just [221 predicted a 3 percent I has produced 121 very substantial- in fact
gets us down to over 50 13J percent 1)1
gr<?wth in the Mexi~~c<?nomy ~_
percent of GDP Predictions this year hI
Page 19
[41 the CBO for the deficit are, I think
III for 1996. We want the ~lexican
$140 billion for 151 1996, which is k~\
Government to increase [2J domestic
than half it was when the 16J Presidenl
savings. Do you agree with this pre·
was elected.
diction, 131 and what is your final view of
1"1 Clearly, it would be good to put III
the next level- the 141 next savings of the
place a 181 budget that goes to balance III
final savings by the Mexican [51 Govseven years, and the 191 CBO testiJjn!
ernment?
yesterday, I believe, in the House,and III,
[61 SECRETARY RUBIN:Well, we have
I think they're testifying again today at
avoided 17J having these specific prethe Senate, [III that the President's bud·
dictions with respect to 181 Mexican
get, by their scoring, does in 1121 Lill
growth, but I think it is very fair to say 191
balance over seven years. In fact I think
that an enormous amount has been
they [131 said it's a $3 billion surplus. or
accomplished in IIOJ Mexico.
something like 1141 that.
1111 If you think about where ~lexico was
1151 So I think that the Administration 1\
in 112J january or February of 1995, and
veryl6J strongly positioned, where
Min-U-Script®
(5) Page 16 - Page 2]
April 18, 1996
UMTED STATES DEPARTMENT OF TREASURY
PRESS BRIEFING
generally the President (17) said that he is three !21) years, the whole time we've
Page 26
ready anytime to sit down and try to (18) , been here, and that is [221 that once the
(II trying to do ri~ht things, I think bot~
workthrough~ 'mdget,aslongasthere's ' President came out with the Deficit
bilaterally
I.!I and multilaterally, multiPage 24
a budget [19] that makes sense for the - - - - - - laterally being the bank. the I~I fund, that
future of this country and (201 meets the (II Reduction Program. even bc:fore it it's important to give them the debt 141
priorities that he has,
was enacted, once he /2/ came out with service that makes them viable.
[21[ I think there is a broad recognition
the Deficit Reduction Program; the (31 lSI SENIOR TREASURY OFFICIAL:Why
around [221 the rest of the world that this markets accepted the credibility ofthat don't we do 161 one more?
program more /"1 rapidly, frankly, than I
country is committed
(71 SECRETARY RUBIN:You always do
Page 22
thOUght they would,
one more 18) and get the question you
[I) to fIScal discipline, though clearly to
[51 And interest rates came down. And I don't want.
have a budget (21 in place or not. Yes, sir. I think /61 what happened is that the
(9/ CORRESPONDENT: Do you still favor
T
h
deficit premium, which in my 171 view
131 CORRESPONDEN : Sir, on t e quest- has been quite large, the deficit premium the 1101 renewal of China's most favorate
ion of (4) multilateral debt relief, your in very (81 large measure came out of nation status?
German counterpart (51 Mr. Wa~gel, said intermediate long-term rates /91 that /111 SECRETARY RUBIN: Yes.
thismoming, reiteratcd his 161 opposition really impact the economy. And I think (UI CORRESPONDENT: Eveninthelight
to IMF gold sale? How far do you (71 with that [101 circumstance, that long- of the (I~I present circumstances?
sympathize with this? He talked a~ut term rates over time will be (II I at levels
using their own (81 resources to relieve that are consistent with maintaining 1141 SECRETARY RUBIN:The question
is: Does [I~I the President favor the
that.
solid (121 growth.
[91 SECRETARY RUBIN: We believe they (ljl Now atany given time, as markets (141 renewal of MFN and the answer (161 is
should (10) use their own resours, and it fluctuate, they may be higher they "yes." Now, as you correctly say, because
that was (171 another piece of your
obviously can lead you (III into the shouldbelower.(I'l) I'm not commenting
question.
there are issues, very /181 imquestion that Mr. Waigel addressed, I on the level rates right now. I'm (161 not
ponant
issues
that need to ~e ad~ress.ed
guess (121 the answer that I would give is commenting on that at all. I' m just sa ying
and; 191 resolved in our relanonshlp Wlth
thatitseemsto me (131 that the L\fFhasto over /171 time, with the deficit premium
do is to look at its resources and 1141 out, for a very large [181 measure; very, China. As you IlOl correctly say, the
nuclear proliferation is one, IPR [21) is
mobilize them in the manner that will ' very large measure at this point. UU~I another. human rightsisanarea in which
generate the /151 resources they need.
of rates, I believe the rates will"be this (ZZI country has a long, long, long
(16) Yes, sir.
consistent with (201 solid growth.
position of strong
(171 CORRESPONDENT; Mr. Rubin, are (211 CORRESPONDENT: Is it fair to say
Page 27
you (181 concerned at all by some of the you don't (221 see any risks in the near.
(II
advocacies,
and
that's
another.
noise made by the [191 Democrats in the future then _
Senate with regard to Mr, Greenspan's :.::.:.=:...:::.:.::.::.:...--------:p=-a-ge-2=S (ll And while at the same time that we
, extend (3; MFN because we believe that
(201 nomination? He's meeting with Mr.
China - it's in China's !41 interestand our
Harken today. [211 Apparently there's III SECRETARY RUBIN: Risks of what?
some concerns about his (221 renom- (11 CORRESPONDENT: Of long-term r. interest for China to be more and (S) more
pan of the global economy an~ th.e
ination. Is that a concern to you, at all?
ales [3) jeopardizing economic growth.
global 16) institutions that we have mthiS
Page 23
(41 SECRETARY RUBIN: I think I'll stick economy. At the /71 same time that we
(II SECRETARY RUBIN:Oh,I don't have
with 151 just what I said. I think the most pursue that path, we are a15'.' (81 comany [21 questions that Mr. Greenspan is likely scenario (61 this year is the c~n- mited to a vigorous purswt of our
going to be [3] reconfirmed. There may tinuation of solid growth, low (71 m- . interests or our (91 views in (hese other
be people who have issues that 141 they flation; and I think the long-term ra~es ! areas,
thin~~ - you know, that they feel they'd
will hit (811eveis that are consistent wtth (101 CORRESPONDENT; Do you antilike to lSI discuss further and explore I that expectation.
cipate the (Ill debate over MFM to be
funherwith i61 Mr. Greenspan, but in the . [91 CORRESPONDENT: The
London particularly vigorous (his year?
final analysis, I don't (71 think there's any . bank suggested [101 reducing debt relief
Illi SECRETARY RUBIN: I suspect we'll
question that he will be (81 reconfirmed. in the Paris group to 90 percent. [III you
have a [131 vigorous debate this year. yes.
(91 Why don't we do twO more questions? said you would be happy with 80
1111 We'll take two more questions.lJlair?
(1(11 CORRESPONDENT: Secretary
percent. What (Ill percent would the
(151 CORRESPONDENT: This morning
Rubtn, I think [III you were quoted U,S. be happy with?
yesterday. Tell me if I gOt this [121 right, ml SECRETARY RUBIN: Well. I beli~ve Mr. Templeton 1161 said that the orderly
that you don't see any real threat to the ' now it's [141 sixty-six and two.thrrds reversal that G·7 called for /171 last year
113/ economic rest of the world from the percent; right? 1 think th~t 11~1 the has been a success, and he said that
1181 speaking the G-7 .currencies
U.S. because of (141 the recent run upon question of taking that SixtY-SIX and t~o broadly
are now reflecting [191 fundmg. Would
long-term rates?
thirds /161 of some other percentages IS a you agree?
/ISI SECRETARY RUBIN: Well,that's notvery important issue Jl71 [hat is legit·
(:!OI SECRETARY RUBIN:As I indicated
imately raised to discussion,
in our (211 discussion earlier, I neither
[161 CORRESPONDEtn: Okay. I'm glad I 1181 I think I'd rather not expressourview agree nor disagree.
asked.
1191 other than to say that as a general /lll We'll take one more. I guess over
(171 SECRETARY RUBIN: Let me tell you proposition, I [201 think. when you get to here.
what I (181 think I said. H I was quoting these very poor countries that ill) have
Page 28
myself, let me tell 1191 you what I would very large debt loads, if they're on :he
say_
right 1221 path,ifthey're really on a reform /Il CORRESPONDENT: Mr. Secretary,
the IMF III demands strong disclosure
12DJ I said the same thing over the past path, they're
'I
I
E.;iTED STATES DEPARTMENT OF TREASURY
PRESS BRIEFING
standards to avoid another 131 crisis like
Mexico. That is nice, but it's useless if 141
you don't get any reliahle statistics data
which are 151 not manipulated. Now we
know in the past they have 161 been
manipulated many times.Do you want [()
make sure 171 that 181 SECRETARY RUBIN: Well, that's a
good 191 question. They're going to have
to monitor the Ilolqualityofthe dam. But
if you look at the American 1111 regulatory system in securities, disclosure is the
1121 hean of that regulatory system.
1131 I believe that disclosure can be
similarly IHI imponant in international
markets.Nowas you know, IISI once they
put out the disclosure standards, then 1161
countries can elect to comply or nor
comply.Ithink 1171 there's something like
a two-year period for a 1181 country's
initial phase co sign up.
[191 My view is that over time, in the
fullness 1201 of time, countries will not
have a real choice on that 1211 issue;
because international investors are going to 1221 get very focused on these
standards. And if you don't
AprU 18, 1996
ities 161 after that? The President's priorities are education, 171 the environment.
training, Medicare, Medicaid. They IRI
have much larger tax cuts than we do,
hut they have 191 much larger ta"{. Their
tax cuts are much more airr.ed 1101
toward the affluent.
I111 In orderto finance those majority lJX
1111 cuts, they have to have relative and
Significant cuts: 131 in the areas that we
think are critical are imponant 1141 to the
economic future of the country and to
, our II ~I social conditioni of Medicare and
Medicaid. That is 1161 the guts of the
, difference, But the Preiidenr in that WI
context ii ready at any time to sit down
with 1181 Republicans to reach a balanced
budget agreement.
I
i
,
1191 CORRESPONDENT: But is it wonh it
to 1201 compromise no \V, or would you
rather take that issue to 1211 the American
people in November?
1221 SECRETARY RUBIN:The President
wants a
Page 31
i
balanced budget. He want.. to put it in
'
place now, but 121 it's gar to be consistent
with the principles that he 131 thinks are
Page 29
right for the future of this country.
III sign up. I think you'll substantially
141 Clearly, if you can work out such an lSI
disadvantage 121 yourselfin international
agreement, there will be imponant
capital markets.
issues for them to 16J debate before the
131 So I think that Signing up for this
American people in the election,and 171 I
program (41 you will find disclosure
think that will be an imponant pan of
requirements is going to lSI become
the election 181 campaign. But none of
requisite for effectively functioning and
that should stand in the wayofl91 putting
161 borrowing any capital in the local
together a balanced budget.
bank market.
1101 The President said in his State of the
171 I think there's going to be enormous 181
1111 Union Address, that if you look at the
imponance over time. Clearly, I represnumbers in the 1121 underlying policies.
ent the IMF is 191 going to have to
there's enough common ground on Inl
monitor, as you correctly said. the 1101
numbers and underlying policy to requality of information. We'll take one
place the budget 114\ now. It's his belief
more question 1111 and then we're gone.
that we should do it, and I IISI think he's
absolutely right in that respect. Thank
1121 CORRESPONDENT: Is it more imponantfor 1131 the administration to have
1161 you, very much.
an election issue or 1141 election issues
117J (Conclusion)
than a budget this year?
11~1 CORRESPONDENT: That's the last
question?
1161 SECRETARY RUBIN:Tnat's the last
question? 1171 Let me answer it this way. ,
I'll give you a very solid Iitli substantive I
answer. There is no question that the 1191
President is committed to putting a
budget agreement 1201 in place, if he can
get one, on terms that he thinks 1211 are
ri::;ht for the people of the country. And
as you (221 know, as now independent
CBO has now validated yes, or - - Page 30
111 they did yesterday and they already
did today in (21 testimony, we have put
out a seven-year budget that 131 goes to
balance, by CBO scoring. as has the 141
congressional majority.
~The question is, what art: your prior- !
(II
I
DEPARTMENT OF THE TREASURY
WASHINGTON, D.C.
SECRETARY OF THE TREASURY
April 18, 1996
The Honorable Richard K. Arrney
Majority Leader
U.S. House of Representatives
Washington, D.C. 20515
Dear Mr. Leader:
I am writing to urge the Congress to move as promptly as possible
to enact the proposed legislation recapitalizing the Savings
Association Insurance Fund (SAIF). This legislation, proposed
jointly by the Administration and the Federal Deposit Insurance
Corporation, with strong support from the Federal Reserve Board,
passed both Houses of the Congress last year as Title II of the
budget reconciliation bill.
The legislation would accomplish three important objectives.
would:
It
•
require SAIF members to pay a $5.5 billion special
assessment to bring SAIF up to its statutorily required
reserve ratio;
•
spread the $780 million annual interest cost on the socalled FICO bonds pro rata among all depository
institutions that benefit from FDIC insurance; and
•
provide for a conditional merger of these two FDIC
funds within two years.
This legislation is critically important. Because SAIF is
seriously undercapitalized, it charges healthy institutions 23
cents per $100 of deposits, while the Bank Insurance Fund (which
is fully capitalized) charges healthy institutions virtually
nothing. As Chairman Greenspan has forcefully testified, this
extreme disparity in premium costs will impel depository
institutions to use all means at their disposal to reduce their
SAIF-insured deposits.
As that portion of the SAIF assessment base from which FICO
interest is paid diminishes -- and it has been decreasing at an
average annual rate of about 11 percent since 1989 -- the
prospect of SAIF reaching the point where it is unable to pay the
interest on the FICO bonds in the relatively near future becomes
quite realistic. If the base were to decline at the rate of 20
percent, which could readily occur if SAIF members concluded that
2
Congress will not act soon on the proposed legislation, that
point could be reached as early as next year.
There is no better time than now for Congress to pass.this
legislation. Both BIF and SAIF members are realizing record
earnings, and the two industries are in excellent condition. The
additional premium cost that BIF members would bear from sharing
FICO interest would not be more than 2.5 cents per $100 of
deposits. This is far below the 6.8 cents in average annual net
premiums paid by banks over the history of the FDIC. It would
affect banks' return on assets by less than 1/100th of 1 percent.
If there is delay in the enactment of this legislation, we and
the FDIC fear that the willingness of SAIF members to capitalize
the fund with a $5.5 billion payment this year may dissipate, as
thrifts seek other ways to reduce their reliance on SAIF-insured
deposits. This could leave SAIF vulnerable to industry and
economic shocks, and could result in Congress having to revisit
this issue at a time when the condition of the two industries is
far less favorable than it is now.
Two suggestions have been made for changes in the language of the
proposal, on which we would like to comment:
First, we oppose moving the record date for the special
assessment from March 31, 1995, to some later date.
Second, under the current legislative language, BIF members would
receive a rebate of premiums paid since January 1, 1996 -- a
total of about $10 million. It has been suggested that the
language be changed to provide a retroactive rebate of premiums
paid during the last half of 1995. We understand that such a
change could have adverse scoring consequences as high as $500
million.
We cannot support any change in the rebate language that would
have adverse scoring consequences. We note, however, that the
FDIC has concluded that under the current legislative language,
BIF members would not begin sharing in FICO payments until
July 1, 1996 -- six months later than originally contemplated,
which would be equivalent to a $300 million rebate. We
understand there have been discussions of having BIF members
begin sharing in FICO payments on January 1, 1997, and we would
not object to that change.
The SAIF and FICO problems are the last vestiges of the problems
of the thrift industry that caused such concern for Congress
during the 1980s, and that imposed a cost on American taxpayers
of more than $125 billion. The bipartisan solution that is now
proposed, which Congress has already approved pnce, can put these
problems to rest with no further cost to taxpayers.
3
We urge Congress to act immediately and not to pass up this
important opportunity to achieve a result of which we can all be
proud.
We stand ready to work with you ln any way we can to accomplish
this result.
Sincerely,
Robert E. Rubin
DEPARTMENT
OF
THE
TREASURY
~ NEW S
TREASURY
...............................l~·~~'~·.f.I........·................
fZ"'!'
(('<-
~.~~)
II..
ornCE OF PUBUCAFFAIRS -1500 PENNSYLVANIA AVENUE, N.W.• WASIllNGTON, D.C .• 20220. (202)
,
. 622-2960
April 19, 1996
Monthly Release of U.S. Reserve Assets
The Treasury Department today released U.S. reserve assets data for the montb of
March 1996.
As indicated in this table, U.S. reserve assets amounted to $84,212 million at the end
of March 1996, down from $84,270 million in February 1996.
End
of
Month
Total
Reserve
Assets
Gold
StocklJ
Special
Drawing
Rigbts 1/1/
Foreign
Currencies
~/
Reserve
Position
in IMP 1/
1996
February
84,270
11,053
11,106
47,298
14,813
March
84,212
11,053
11,049
46,861
15,249
11
Valued at $42.2222 per fine troy ounce.
1/
Beginning July 1974, the IMF adopted a technique for valuing the SDR based on a
weighted average of exchange rates for the currencies of selected member countries. The
U.S. SDR holdings and reserve position in the IMP also are valued on this basis
beginning July 1974.
1/
~/
Includes allocations of SDRs by the IMF plus transactions in SDRs.
Includes holdings of Treasury and Federal Reserve System; beginning November 1978,
these are valued at current market exchange rates or, where appropriate, at such other
rates as may be agreed upon by the parties to the transactions.
RR-I016
Far press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
Monthly Treasury Statement
of Receipts and Outlays
of the United States Government
For Fiscal Year 1996 Through Marth 31, 19%, and Other Periods
Highlight
The cumulative outlays for the Earned Income Credit are $13.8 billion, $5.9 billion more
than Fiscal Year 1995. This is due primarily to elimination of delays experienced in 1995
that were associated with Internal Revenue Service fraud prevention measures.
RECEIPTS, OUTLAYS, AND SURPLUS/DEFICIT
THROUGH MARCH 1996
800
Contents
700
Summary, page 2
B
Receipts. pagp 6
I
L
L
I
Outlays. page 7
Means of financing. page 20
0
N
S
Receipts/outlays by month. page 26
Federal trust funds/securities. page 28
100
Receipts by source/outlays by
function. page 29
0
DEFICIT
I:xplanatory notes. page 30
Compiled and Published by
Department of the Treasury
Financial Management Service
Introduction
Of receIpts are treated as deductIOns from gross receIpts. revolVIng and management fund receipts, reimbursements and refundS of monies preVIously expended are
treated as deductIons from gross outlays; and Interest on the publiC debt (pubhc
issues) is recogniZed on the Bccnual baSIS Malor information sources Include
accounting data reported by Federal entities, disburSing officers. and Federal
Reserve banks.
The Monthly Treasury Statement of Receipts and Outlays 01 the UMed States
Government (MTS) IS prepared by the FinanCial Management Service. Department of
the Treasury. and after approval by the Fiscal Asslstam Secretary of me Treasury, IS
normally released on the 15th workday of the month follOWIng the reportIng month
The publicatIon IS based on data provIded by Federal entitIes. dIsburSing officers,
and Federal Reserve banks
Triad of Publications
The MTS IS part of a triad of Treasury financial reports. The Daily Treasury
Statement is publiShed each working day of the Federal Government. It prOVides
data on the cash and debt operations of the Treasury based upon reporting of the
Treasury account balances by Federal Reserve banks. The MrS IS a report of
Government receipts and outlays, based on agency reporting. The US Government
Annual Report is the official publicatIon of the detaIled receipts and outlays of the
Government. It is published annually in accordance wilh legislative mandates given
to the Secretary of the Treasury.
Audience
The MTS IS pubhshed to meet the needs of Those responSIble for or interested
In the cash poSitIon of the Treasury, Those who are responSible for or Interested In
the Government's budget results; and mdlvlduals and bUSInesses whose operations
depend upon or are related to the Government's fInanCial operations
Disclosure Statement
ThIS statement summanzes the fInanCIal actiVIties of the Federal Government
and off-budget Federal entities conducted In accordance with the Budget of the U.S.
Government. Ie. receipts and outlays of funds, the surplus or defICit, and the means
of finanCIng the defiCIt or dIspOSing of the surplus InformatIon is presented on a
modIfIed cash baSIS receIpts are accounted for on the baSIS of collectIons; refunds
Data Sources and Information
The Explanatory Notes section of thiS publication provides information concern·
ing the flow of data into the Mrs and sources of Information relevant to the Mrs
Table 1, Summary of Receipts, Outlays, and the Deficit/Surplus of the U.S. Government, Fiscal Years 1995 and 1996,
by Month
[$ millions)
Period
Outlays
Deficit/Surplus (-)
89,024
87,673
130.810
131,801
82,544
92,532
165,392
90,405
147,868
92,749
96,560
'143,221
120.365
124,915
135,613
116,166
120,899
143,074
115,673
129,958
135,054
106,328
130,411
'2135,978
31,342
37,242
4,803
-15,635
38,355
50,543
-49,720
39,553
-12,814
13,579
33.851
-7,243
31,350,577
31,514,433
3163,856
95,593
90,008
138,271
142,922
89,349
89,011
118,352
128,458
132.984
123,647
133.644
136,286
22,758
38.450
-5,286
-19,274
44,295
47,275
645,154
773,372
128,218
Receipts
FY 1995
October
November
December
January
February
March
Apnl
May
June
July
August
September
Year-te-Date
FY 1996
October
November
December
January
February
March
Year-te-Date
'ReceIpts have been Increased by $2 million and outlays have been Increased by $1 mIllion In
September 1995 to rellecl additional repor11ng by the Corporation for National and Community
ServIce
20utlays have been Increased by $5 million In September 1995 10 reflect additional reporllng by
the Department of Justice
'The receipt, outlay and defiCIt figures differ from the FY 1997 Budget. released by the OffIce
of Management and Budget on MarCh 19, 1996 by $64 mIllion due mainly to reVISIons In data
follOWIng the release of the Final September Monthly Treasury Statement
2
Table 2. Summary of Budget and Off-Budget Results and Financing of the U.S. Government, March 1996 and
Other Periods
[S millonl)
CUrrant
This
Month
Clalillic:lllion
Flecel
VHr to Date
Budget
Eltlmate.
Full FiIcaI
Vear'
PrIor
Fiscal VHr
to DteI
(11151
E,1iIIa1el
Ned FIIcaI
v.. (11171'
Budget
Total on-budget and off-budget resUts:
Total receipts .•..................•.....•....••..........
On-budgel receipts ...................................
Off-budget receipts ..................................
To18I outlays ............................................
On-budgel outtays .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . •.
Off-llUdget outlays ...................................
Total surplUs 1+) or deficit 1-) ........................
645,154
l.m,nS
614,383
1,495,238
56.677
474,378
1.059,334
448,738
1,107,223
170,776
165,644
388,015
367.441
===-=32~,3§:34~===~~========:=;;==========
136,286
n3,372
1.572.411
761,033
1.635,329
108,365
627.804
1.270,292
621,514
1.317,855
-47,275
-128.218
-145,636
-146.850
-140,091
-51,688
-153,426
-210,958
-172.n6
-210.432
47,275
128,218
145.636
146.650
140.091
38,189
9,283
-197
113.798
16.075
-1.655
165.272
-2.051
-17,585
125.615
17.845
3,190
164.326
145.568
302.119
139.519
317.674
===27§=,§92=:='===~~=====~;;::=================
On-budget surplus 1+) or deficit I-I ................
Off-budget surplus
89.011
+70,341
+6S,322
+26,125
+25.208
1+1 or deficit 1-) ................ ===+::4:=,4:::;'3=============================
Total on-budget and off-budget financing.............
Means 01 manci1g:
Borrowing from the public •....................•.....
ReductiOn of operating cash, increase (-) ..•......
By other rnetIIS .................................... ..
'TheIle llguren based on the FY 1997 Bud!/III, reIe88ed by the 0fItce 01 Management and
Budget on MII'dI 19, 1996.
... No Trllllll8Cllanl.
Note: De1aIs may not add 10 IIII8Is dUe to rounding.
Figure 1. Man1hIy Receipts, Outlays, and Budget DellcltlSurpius at the U.s. Government, F a Years 1995 lind 1996
$ billions
1801~-----------------------------------------'
Outlays
160
140
60
Receipts
40
20
.2~:II,,dj;j'llr"~~lf'q,r"""1
Deficit(·)/Surplus
-60
.OO~~~~~~r-r-~.-.--r-r-.-'~r-r-~~
M
~
~
~
~~
FV
96
FY
95
3
-24.235
Figure 2. Monthfy Receipts of the U.S. Govemment, ." Souru, F"ISCIII Yea,.. 1995 Ind , .
$ billions
180.~----------
__________________________________- .
ITotal Receipts J
1
1
Oct.
Dec.
Feb.
Apr.
Jun.
Aug.
Oct.
FY
FY
95
96
Dec.
Feb. Mar.
Figure 3. Monthly Outlay. of the U.S. Government, ." Function, F"ISC8I Yea,.. 1995 and , .
$ billions
1RO,~==~----------------------------~
I
1
Total Outlays
1
1
1
Oct.
Dec.
Feb.
Iinterest
I
Jun.
Aug.
Oct.
FY
FY
95
96
4
Dec.
Table 3. Summary of Receipts and Outlays of the U.S. Government, March 1996 and Other Periods
($ millions]
This Month
Current
Fiscal
Year to Date
22.523
15.460
293.584
64.205
274.680
56.550
630.873
167.108
32.334
8.752
165.644
2.467
170.776
49.654
8.261
2.294
27.159
7,405
9.284
12.532
9.865
213.949
367.441
105,745
29.810
4.539
53.886
15.924
19.313
32.136
89,011
645.154
614,383
1,426,775
(On-budget) ................ .
56,677
474,378
448,738
1,059,334
(Off-budget) .................................. .
32,334
170,776
165,644
367,441
162
1,129
215
25
825
3.916
1.366
99
1.464
1,406
112
6,357
28,437
7.124
35.022
2.695
3,297
206
10.445
287
21.556
1,842
122.926
1.770
3.789
254.325
2.664
16.194
15.096
130.088
15.656
16.207
8,927
148,383
14.653
30,404
14.678
327.429
Classification
Comparable
Prior Period
Budget
Estimates
Full Fiscal Year'
Budget Receipts
Individual income taxes
Corporation Income taxes .
Social insurance taxes and contributions.
Employment taxes and contributions (off-budget)
Employment taxes and contributions (on-budget) .
Unemployment insurance
Other retltement contributions
Excise taxes
Estate and gift taxes
Customs duties
Miscellaneous receipts
Tolal Receipts ................................................ .
258
419
4.133
1.137
1.528
48.416
8.571
2.275
27.680
6.653
Budget Outlays
Legislative Branch
The Judiciary
Executive Office of the President
Funds Appropriated to the PreSident
Department 01 Agriculture
Department of Commerce
Department of Defense-Military
Department of Defense-Civil
Department 01 Education ..
Department 01 Energy
Department 01 Health and Human Services
Department of Housing and Urban Development
Department 01 the Interior
Department of Justice ..
Department 01 Labor
Department of State
Department of Transportation
Department of the Treasury:
Interest on the Public Deot
Other
Department 01 Veterans Affairs .
Environmental Protection Agency
General Services Administration
National Aeronautics and Space Administration
Office of Personnel Management
Small Business Admlnlstrallon
Social Security Administration
Other Independent agenoes
Allowances
Undistributed offsetting receipts:
Interest
Other
Total outla ys .................................................. .
2.620
1,222
26.366
3.122
485
8.022
155,035
14.069
3,262
920
5.596
2.990
432
2.915
16.811
2.466
20.139
7.171
170.951
14.507
3.287
481
17.619
396
1.057
3,758
41
18.567
3,059
1,591
6.558
20.959
31.384
386
182.683
-117
1,806
3.8t2
'5.214
15.748
3,092
19.111
161,985
8.592
18.852
3.077
709
6.472
20,205
473
176}76
2-2.105
54,840
32.255
26.432
6.939
12.964
34.404
5,500
38.994
344.628
20.328
37.606
6.329
469
14.190
42.374
957
377,255
9.192
-647
-2.490
-47,851
-16,170
-45,534
-16.270
-97,598
-42.268
136,286
773,372
761,033
1,572,411
1,270,292
-143
(On-budget' ................................................. .
108,365
627,804
621,514
(Off-budget) ................................................ .
27,921
145,568
139,519
302,119
-47,275
-128.218
-146,650
-145.636
-210,958
+65.322
Surplus
(+, or
deficit (-) .................................. ..
(On-budget) ................................................. .
-51,688
-153,426
-172,776
(Off-budget) ............................................... ..
+4,413
+25,2D8
+26,125
'Outlays have been increased by $5 million In September 1995 to reflect additional reporting by
the Department of Justice.
Note Details may not add to totals due to rounding
'These figures are based on the FY 1997 Budgel. released by tne Office of Management and
Budgel on MarCh 19 1996
'Receipts have been Increased by $2 million and outlays have been Increased by $1 million in
September 1995 to reflect additional reporting by the Corporation for National and Community
Service
5
Table 4, Receipts of the U,S, Government, March 1996 and Other Periods
[S millions]
Classification
Gross
ReceIpts
IndivIdual .ncome taxes:
Withheld
PreSidential Election Campaign Fund
Other
I
1.
CUlTent Fisca' Year to Date
This Month
RefundS' Receipts
(Deduct)
Gross
Receipts
I
Refunds
(Deduct)
Receipts
281,3670
25
51,231
41,834
16
5,790
Prior Fiscal Year to Date
Gross
Receipts
I
Refunds
(Deduct)
I
R
. t
ece.p s
263.677
24
44.730
.........................
47,640
25,118
22,523
332,623
39,039
293,584
308,431
33,752
274,680
Corporalion income laxes ....................................
17,793
2,332
15,460
74,794
10,5B9
64,205
66.948
10.298
56.650
26,797
634
2
26,797
634
643
142.574
2,268
1
123,806
2,943
(")
("')
143,217
2,268
1
(' ')
27,433
27.433
145,486
4,788
113
4,788
113
25,511
542
(")
r ')
(")
4.901
4,901
26,052
8.081
259
8.081
259
46,665
988
Total-Individual income taxes
Social insurance taxes and contributions:
Employment taxes and contributions:
Federal old-age and survivors ins trust fund:
Federal Insurance Contributions Act taxes
Self-Employment Contributions Act ta~es
DePOSitS by States
Other
Total-FOASI trust fund
Federal disability Insurance trust fund:
Federal Insurance Contributions Act taxes
Self-Employment ContribullOns Act taxes , . . . . .
Receipts from railroad retirement account
................
Deposits by States
Other
...........
Total-FDI trust fund
...........
Federal hOSpital insurance trust fund:
Federal Insurance Contributions Act taxes
Self-Employment Contributions Act taxes ...
Receipts from Railroad Retirement Board
DepoSits by States
Total-FHI trust fund
Railroad ret,rement accounts:
Rail industry pension fund
Railroad SOCial Security equivalent benefit
2
123,806
2,943
r ')
1
1
(" ')
(")
643
144,843
126,751
126.751
119
25,391
542
37,840
1,053
37,840
1.053
(")
(")
(")
119
25,933
38,894
38,894
-13
46.678
988
44,936
1,326
44,936
1,326
(")
(")
(")
(")
(")
(")
8.340
8.340
47,653
-13
47.666
46,263
46.263
209
t58
'-45
254
158
1,120
956
88
1,031
956
1,185
978
9
1,176
978
41.041
-45
41.086
221.267
838
220.430
214,070
9
214.061
210
49
210
48
31
(")
6,594
1,656
11
6,753
1,836
12
30
(")
6,594
1,687
11
6.753
1.806
12
259
258
8.292
31
8,261
8,601
30
8.571
Other retirement contributIons:
Federal employees retirement - employee
contributions
Contributions for non-federal employees
401
18
401
18
2,238
56
2,238
56
2,228
47
2.228
47
Total-Other retirement contributions
419
419
2,294
2.294
2,275
2,275
Total-Employment taxes and contributions
Unemployment insurance'
State taxes deposited in Treasury
Federal Unemployment Tax Act taxes
Railroad unemployment taxes . . . . . . . . .
Railroad debt repayment ................
Total-Unemployment insurance
"""
Total-Social insurance taxes and
contributions .................... , .................. ,
Excise taxes:
Miscellaneous excise taxes' ..
Airport and airway trust fund
Highway trust fund
Black lung disability trust lund
.. .. . ..... .
...........
41,719
-44
41,763
231.854
869
230.985
224.946
39
224.907
2,341
31
1,836
-189
310
298
2.530
21
1.538
44
14,579
1,490
11,356
294
148
16
395
14,430
1,474
10,961
294
14.270
2.589
11,427
307
693
9
211
13.577
2,580
11.217
307
28,593
913
27,680
44
...........
.............................. , ..... ,
4,252
119
4.133
27.718
559
27,159
Estate and gift taxes .........................................
1.170
34
1,137
7,604
198
7,405
6,850
197
6,653
...............................................
1,608
80
1.528
9.831
547
9.284
10,694
829
9.865
2,051
416
10,344
2,193
5
10,344
2,188
11,756
'2.199
7
11,756
2,192
Total-Excise taxes
Customs duties
Miscellaneous Receipts:
DepoSIts of earnings by Federal Reserve banks
All other
Total Total Total Total -
2.051
417
Miscellaneous receipts ." .....................
2.469
2,467
12.537
5
12.532
13.956
7
13,949
........................................
On-budget ......................................
Off-budget ......................................
116,652
27.641
89,011
696,961
51,807
845,154
660,417
46,035
614,383
84.318
27,641
56,677
525,422
51,044
474,378
494,773
46,035
448,738
32.334
171,539
763
170,778
165.644
Receipts
32.334
'Incluoes a pnor penOd adloSlmenl
21ncludes amO..Jnts lor the wlf'ldtall profits tax pursuant to P L 96-223
'Represents a QuarTerly adjustment 01 excise tax race'pts lor the penod ending
by
September 30.
1995
6
165.644
'Recetpts ha_e been Increased by 52 mllhon In September 1995 to reflect additional reporlJng
the CorporatIOn lor NatlOOaI ana Community Service
NO Transactions.
(. '! Less than $500.000
Note DetailS may not add to tOtalS due to rounding.
Table 5. Outlays of the U.S. Govemment, March 1996 and Other Periods
[S millions]
This Month
Classification
Gross !APPliCablel
Outlays Receipts Outlays
LegislatiYe Branch:
Senate ....................................................... .
House 01 Representatives ................................. ..
Joint items ................................................ .
Congressional Budget Office ............................... .
Architect of the Capitol ................................... .
Library 01 Congrass .................................. ...... .
Government Printing Office:
Revolving lunCl (net) ............................. .........
General lund appropriations ...............................
General Accounting Office .. ................................
United States Tax Court ... .... ............................
Other Legislative Branch agencies ........ ..................
Proprietary receipts Irom the public .........................
Intrabudgetary transactions ..................................
Total-Legislative Branch ................................
The Judiciary:
36
(")
60
36
(")
60
6
2
40
-26
9
-26
9
30
30
4
2
4
2
-1
-2
-2
-11
162
',139
2
14
202
1.297
11
58
215
1,369
3
5
16
25
-46
228
2,202
1,667
164
2
11
78
3
OuUays
210
352
40
11
74
Prior Fiscal Year to Date
Gross
Oullays
IAPPlieabl~
ReCeipts
217
I
Oullays
216
367
369
38
10
38
10
90
450
94
450
4
2
48
207
16
13
-5
-11
27
47
202
15
16
27
47
202
15
16
8-8
1,129
1,478
14
13
3
1.294
58
1.338
58
3
1.335
58
3
1,366
1,408
3
1,406
19
26
19
18
28
16
54
54
66
66
25
99
99
112
112
-80
2,202
1,667
25
12
467
2,461
169
169
2
48
207
16
13
5
10
-7
-7
14
1,464
===========~;;;~==~=,,;;;;;=~;,;;,;~=~~=~~
( )
Total-The Judiciary .................................... ,
215
(0 ')
ExecutiYe Office of the President:
Compensation of the President and the White House
Office ...................................................... ..
Office of Management and Budget ....................... ..
Other ...................................................... ..
3
Funds Appropriated to the PreSident:
International Security ASSistance:
Foreign military loan program .......................... ..
Foreign military financing program ...................... ..
Economic support fund ................ .. ................ .
Peacekeeping Operations ................................ ..
Other ................................................... ..
Proprietary receipts from the public .................... .
211
353
13
31
202
11
Total-Executive Office 01 the President
I
Gross lAppliceble
Outlays Receipts
6
2
13
31
Supreme Court of the United States ..................... ..
Courts of Appeals. District Courts, and other judicial
services ................................................... ..
Other ....................................................... ..
Total-International Security Assistance
Current Fiscal Year to Date
2
..
5
35
52
97
4
1
81
52
4
97
4
1
-4
85
104
26
308
25
12
450
758
13
18
28
341
126
2.461
2.112
46
405
-405
746
4.353
2,112
46
12
-450
5.099
12
............. .
189
InternatiOnal Development Assistance:
Multilateral Assistance:
Contribution to the International Development
Association ..................... .. . .. .. .. .. .. .. .. . .. .. ..
Internatonal organizations and programs .... . . . . . . . . . .
Other .......... .......................... ..........
627
627
509
509
67
98
67
98
84
336
84
336
397
250
397
250
165
165
1.047
1.047
1,156
1.156
561
188
561
405
389
255
Total-Multilateral Assistance .......... ...... ........
Agency lor International Development:
Sustainable development assistance program ......... .
Assistance for eastern europe and the baltic States ..
Assistance for the new independent States of me
former soviet union ................................... .
Development fund for Africa ......................... .
Operating expenses ................................... ..
Payment to the Foreign Service retirement anCl
disability fund .... . .................................... .
Other ................................................... ..
Proprietary receipts from the public ................... .
Intrabudgetary transactions ................. .
4.135
3.377
=====================================
63
678
678
26
26
172
172
102
102
58
356
301
356
405
58
39
39
235
301
235
389
255
44
45
141
63
-2
25
..
6
71
-2
44
19
-71
148
..
32
423
116
-423
("J
( )
( )
188
45
24
413
-413
116
Total-AgencY' for International Development ...... .
311
77
233
1.933
455
1.478
1,983
438
1.546
Overseas Private Investment CorporatlOll ............... .
Peace Corps .............................................. .
Other ...................................................... .
4
21
7
13
-9
21
7
40
97
146
-106
97
42
24
122
-99
114
114
44
44
Total-International Development Assistance ......... .
506
90
416
3.160
2.559
3,321
75
444
444
-798
Intemauonal Monetary Programs .......................... ..
Military Sales Programs:
Special defense acquisition fund ......................... .
Foreign military sales trust fund ......................... .
Kuwait civil reconstruction trust fund .................... .
Proprietary receipts from the public ..................... .
Other ....................................................... ..
Total-Funds Appropriated to the President ......... ..
75
5
1.228
n
r °i
1.007
5
2,008
1,183
7
42
5
28
1.228
("I
7,130
( )
601
53
..
20
825
14,918
89
6,753
( )
rOJ
7.149
-1.007
5
-25
7.130
8,561
560
-798
90
14
6,357
14,477
-1
6.753
..
-7.149
20
2.761
rO)
5.958
-5,958
14
7,353
7,124
Table 5. Outlays of the U.S. Government, March 1996 and Other Periods-Continued
[$ milions]
_.. - .a
-Current Flacat Year to Oate
This Month
Classification
Gross
Outlays
Department of Agriculture:
Agricultural Research ServICe
Cooperat,ve State Research Education and EKlenslOl1
SerVice
Cooperative state research activities
ExtenSIon Service
Otl'ler
Ammal and Plant Health Inspection ServICE!
FOOd Safety and Inspection Service
Agrtcultural Marketing ServICe
...
Food and Consumer Service
.. .. . ... . .. .... .
FOOd stamp program
State child nutrition programs .... . . . .. ............... .
Women. Infants and children programs .................
.. .... .........................
Other
Total-FOOd and Consumer ServICe
Total-Forest
Service
...........
. .... . . ..
.............
...........
. ., .......
..............
.................
Other
Proprtetary receipts from the publiC
Intrabudgetary transactions
GrolS IAPPliC8bli- Outlays
Outlays Receipts
Outlays
I
Gross
Oullays
Applicable
Receipts
!
Outlays
58
58
372
372
373
373
35
35
35
3
37
37
12
201
190
14
230
254
401
201
190
14
230
254
401
217
218
23
255
250
460
217
218
23
255
250
460
262
1.779
1.319
262
1.779
976
494
1.801
401
494
1.801
46
4.090
5.215
155
5
85
6
150
461
848
-387
38
1
112
-75
1
6.897
-1
317
2
745
965
-220
10.576
46
18
16
306
121
74
85
6
Natural ReSources Conservallon Service.
..........
Conservation operations
Watershed and flood prevenllOn operations
.............
Other
Rural Utlhltes ServICe
Rural electnflcatlOn and telePhone lund
Rural development Insurance fund .. ...
.............. ..............
Other
Aural hOUSing and Community Development Service·
Rural hoUSIng Insurance fund . .. . ..... .
. . . . . . .. .. . . . . . . .
Other
Foreign AgnCLJltural Service .. ... ......................
Forest SerVice
National forest system
Forest and rangeland protection ...
Forest service permanent appropnatlons
Other
!
3
37
37
12
. .....
.......
Applic.able
Receipts
3S
Farm Service Agency
Salanes and expenses
Conservation programs
Federal crop Insurance corporation fund ............
Commodity Credit CorporallOn
Price support and related programs ... .. '" ..
National Wool Act Program ...
Agricultural credit Insurance fund .. .. ....... . , ' .
. . .. . .........
Other
Total-Farm SelVlce Agency ..
J
Prior Fiscal Year to Date
46
18
16
343
782
448
2.807
-1
-464
2
13.450
5
561
4.612
884
8.838
5
-323
5.361
16.715
5.944
10.770
306
121
74
286
148
56
286
148
56
268
84
36
246
22
32
13
51
23
1.181
337
300
1.867
242
103
·686
96
197
1.413
381
211
1.592
248
107
-178
133
104
392
83
74
229
163
83
74
1.515
130
237
1.285
290
130
237
1.894
-68
594
1,259
635
-68
594
2.121
803
2.121
803
332
332
12.917
4.376
1.900
168
13.062
4.033
1.836
258
13.062
4.033
1.836
258
21
21
12.917
4.376
1.900
168
3.277
3.277
19.360
19.360
19.189
19.189
85
26
23
48
85
26
23
48
644
169
406
400
644
169
406
400
653
345
435
1398
653
345
435
398
182
182
1.619
1.619
1.832
1.832
30
-67
230
291
(' ")
-46
210
-495
-46
3.916
37.663
9.226
28.437
5
34
4
67
r "'
.r. • . . .
20
495
1545
272
-545
44,736
9.714
35,022
229
146
158
173
216
187
7
166
216
187
968
220
57
12
956
16
220
41
19
(" ")
r ")
.. . ........... ......
5.472
.. ... ......
....
,
......................
33
21
29
32
21
29
233
146
158
176
47
-8
175
47
1.032
272
6
3
-II
38
14
1.026
272
24
TOlal-Sclence and TechnOlogy
214
3
211
1.341
19
1.321
1.245
28
1.217
Other
Proprtetary receipts from the pubhc
Illtrabudgetary transactions
Offsetting gOliernlTlental recelP:s
5
5
52
52
-64
47
64
(" "J
63
47
-63
Total-Department or Agriculture
Department of Commerce:
Economic Development Admlnlstrallon
Bureau of the Census
Promotion of Int\JStry and Commerce
~
~
,
",
SCience ana Technology
Naltonal Oceanic and Atmosphenc Administration
National Institute of Standards and TeChnOlogy
......
Otner
Total-Department of Commerce
..
1,556
II
("')
.............. , ........
302
15
8
-II
r ",
(. "J
287
U30
(" ")
88
1.842
{"
"'
1,868
r "'
98
1,710
Table 5. Outlays of the U.S. Government, March 1996 and Other Periods-Continued
($ millions]
This Month
Classification
Current Fiscal Year to Date
Gross IAppliCabiel
Outlays
Receipts
Oudays
Gross
Outlays
I
Applicable
Receipts
I
Oullays
I
Prior Fiscal Vear 10 Date
Gross /APPlicablel
Receipts
Outlays
Outlays
Department of Defense-Military:
Military personnel:
Department of the Army ..... ............... , ............
..................
Department of the Navy ..
Department of the Air Force ..............................
2,092
1,892
1,569
2,092
1,892
1,569
11,413
11,485
8.707
11,413
11,485
8,707
12,791
13,089
9,676
12,791
13,089
9.676
...... .................. , ......
5,552
5,552
31,606
31,606
35,556
35,556
Operation and maintenance:
Department of the Army ......... .......................
.., ......................
Department of the Navy ....
.........................
Department of the Air Force
Defense agencies ..........................................
1.946
2,155
1,983
1.478
1,946
2,155
1,983
1,478
10,789
10,892
11,509
9,617
10,789
10.892
11,509
9,617
11,209
11.306
12,358
9.604
11.209
11.306
12.358
9.604
...........
7.562
7,562
42,806
42,806
44,477
44,477
Procurement:
Department of the Army ................................. ,
Department of the Navy .................... , .............
Department of the Air Force
.......... , ...
Defense agencies
638
1.896
1,749
279
638
1.896
1.749
279
3,360
9.501
8.651
1,816
3,360
9,501
8,651
1,816
3,796
11,998
11.206
1.972
3,796
11.998
11.206
1,972
4.562
4,562
23,328
23.328
28,972
28,972
Research. development, test. and evaluation:
Department of the Army ..................................
Department of the Navy ...............................
............................
Department of the Air Force
Defense agencies ......................... ..
460
817
1,194
728
460
817
1.194
728
2.587
4.317
6,245
4,152
2,587
4,317
6,245
4,152
2.520
4,819
6,438
3,956
2.520
4,819
6,438
3.956
Total-Research. development, test and evaluation
3,199
3.199
17.301
17,301
17.733
17,733
82
450
260
618
1,941
464
422
655
1.655
464
422
655
1.655
TOlal-Military personnel
Total-Operation and maintenance .... , ..
Total-Procurement
...............
Military construction:
Departmen: of the Army
Department of the Navy ......................
Department of the Air Force ....
..................
Defense agencies ........... ..
82
-2
104
332
104
332
450
260
618
1,941
.......
517
517
3,269
3,269
3,197
3,197
114
119
89
114
119
89
4
631
658
513
70
631
658
513
34
588
502
531
71
588
502
531
48
11
63
565
63
565
-22
69
-129
-12
1,976
-23
1.976
-26
-1,195
-131
("I
("')
21
4
94
Total-Military construction
..
,'
Family housing:
Department of the Army .............
Department of the Navy .................. ...............
Department of the Air Force
Defense agencies ........................ Revolving and management funds:
Department of the Army ..................
.............................
Department of the Navy
Department of the Air Force ... .. ..
Defense agencies:
Defense business operations fund ........... , ........ ,
.................. . . . . . . . . . . . . . . . . . . . .. . .
Other ......
Trust funds:
Department of the Army . . . . . . . ..........................
Department of the Navy ........ ............... , .........
Department of the Air Force ... ,
Defense agencies . . . . . . . . . . . .
Proprietary receipts from the public:
Department of the Army ..... ..................
................................
Department of the Navy
Department of the Air Force ..............................
.............. ..
Defense agencies
Intrabudgetary transactions:
Department of the Army
Department of the Navy
Department of the Air Force ......
Defense agencies
Offsetting governmental receipts:
.....
Department of the Army
Defense agencies ....... ....
................
.................
......... . .....
Tolal-Department of Defense-Military
-2
7
11
11
69
-129
-12
(".
(")
1
(**'
(")
11
1"1
(*'.
(")
57
13
-19
-10
57
-13
19
10
-27
·24
-5
-11
-27
-24
-5
-11
..4
(
.............
21,610
11
)
53
9
2
(")
10
4
-4
123,504
-22
185
185
n
2
3
('"
(")
(")
99
-77
-177
-54
736
127
-290
..12
(
)
99
161
138
426
188
-211
-1,195
-133
(* *)
15
49
49
736
127
-290
24
11
94
211
77
177
54
n
21,556
36
38
377
113
-76
-161
-138
-426
-188
38
377
113
-76
7
-7
1
-1
(")
(")
(' ')
(")
578
122,926
943
130,088
131,031
Table 5.
Outlays of the U.S. Government, March 1996 and Other Periods-Continued
[S millions]
Classification
This Month
Current Fiscal Year to Dale
Prior Fiscal Year 10 Date
Gro.. IAPPlicable! Outtay.
Outlay.
Receipts
Gross ! APPlicablj Oulla s
Outlay'
Receipts
y
Gross !APPlicable! 0 II
Outlays
Receipts
u 8Y'
.-~-.~~.
Department 01 Defense-Civil
Corps of Engineers
Construction, general
Operation and maintenance, general
Other
Proprietary receipts from the public
525
547
921
13
85
105
91
-13
13
268
1.993
85
105
91
Total-Corps of Engineers
281
Military retirement'
Payment to military retirement fund
Military retirement fund
Intrabudgetary transactions
...........
Education benefits
.............
Other
Proprietary receipts from the public ...............
2,385
7
6
2,385
10.699
14.241
-10,699
12
37
2
7
5
-2
15
2,664
16,283
r .)
533
727
723
78
525
547
921
-78
78
1,915
1,983
2
9
10.699
14.241
-10,699
12
35
-9
11,470
13,662
-11,470
43
40
89
16,194
15,729
64
533
727
723
--64
64
1,919
2
6
11,470
13,662
-11,470
43
38
-6
72
15,656
...................
2,679
Department of Education:
Office of Elementary and Secondary Education:
Education for the disadvantaged .............. ............
Impact aid
.................. o.
School Improvement programs ................
Other
..............
555
77
127
55
555
77
127
55
3.504
296
663
172
3.504
296
663
172
3,455
610
718
57
3.455
610
718
57
814
814
4,635
4,635
4,839
4.839
22
22
86
86
108
108
295
183
3
134
295
183
3
134
1,707
1.204
54
816
1,707
1,204
54
816
1.706
1,161
70
772
1.706
1,161
70
772
5
573
57
8
107
333
4
573
57
8
107
333
24
-20
4.073
403
84
403
1,214
1
14
4,204
415
108
230
2.207
-2
35
r .)
5
4.073
403
84
403
1.214
1
-21
4.204
415
108
230
2.207
-2
1,082
1,081
6,182
24
6.158
7.177
35
7.142
69
35
223
238
17
69
35
-17
203
238
26
223
238
-26
33
203
238
-33
18
2,620
15,147
51
15,096
16,274
68
16,207
869
869
5,998
5.998
6,081
6,081
84
207
11
37
56
22
84
207
11
37
56
22
524
1.544
56
235
326
118
524
1,544
56
235
326
118
780
1,663
49
217
306
110
780
1.663
49
217
306
110
Total-Department of Defense-Civil
Total-Office of Elementary and Secondary
Education
.........................
Office of Bilingual Education and Minority Languages
Affairs
.............................
Office of Special Education and Rehabilitative Services:
Special education
Rehabilitation services and dlsabtlity research ""'"
Special institutions for persons with disabilities
Office of Vocatooal and Adult Education
Office of Postsecondary Education:
College housing loans
........... ............
Student financial assistance
Higher education '"
Howard University
Federal direct student loan program
Federal family education loans ,.
Other
Total-Office of Postsecondary Education
Office of Educational Research and Improvement .......
Departmental management
Proprietary receipts from the public '
Total-Department of Education
Department of Energy:
AtomiC energy defense actiVities
...
~
....................
...........
Energy programs'
General sCience and research activities
Energy supply, Rand D activities "
Uranium supply and ennchment activities ' " .............
FOSSil energy research and development
Energy conservation
............
Strategic petroleum reserve
Clean coal technology
Nuclear waste disposal fund
Other
Total-Energy programs
Power Mark.etlng AdministratIOn
Departmental administration
Proprietary receipts from the publiC
Intrabudgetary transacllOns
Offsetting governmental rece'pts
Total-Department of Energy .. ,."., ................... ,
r .J
2,639
13
76
r .J
13
76
113
426
113
425
171
486
507
r .)
171
486
507
3,343
3,342
3,783
3,782
88
31
222
-135
31
-92
42
714
193
906
234
4
-301
193
-862
-345
-4
1,882
8,022
92
42
(•• J
1.536
315
10
r .J
1,222
1,015
862
-345
9.904
9
-82
234
-848
-231
-9
1,846
8,927
988
848
-231
10,172
Table 5. Outlays of the U.S. Government, March 1996 and Other Periods-Continued
[$ millions]
Classification
Department of Health and Human Services:
Public Health Service:
Food and Drug Administration ....................... .
Health Resources and Services Administration .......... .
Indian Health Services .................. . ................ .
Centers for Disease Control and Prevention ............ .
National Institutes 01 Health ................... .......... .
Substance Abuse and Mental Health Services
Administration .. , ........................................ .
Agency lor Health Care Policy and Research ........... .
Assistant secretary for health ............................ .
This Month
Current Fiscal Year to Date
Prior Fiscal Vear to Date
Gross IAPPlicablel
Outlays Receipts Outlays
Gross IAPPlicable,
Outlay. Receipts Outlays
Gross jAPpliCable!
Outlays Receipts Outlays
68
442
247
205
928
..
(
)
68
442
247
205
928
381
1.780
1.131
1.206
4,742
106
106
9
9
50
..
(
)
2
379
1.780
1,131
1,208
4,742
397
1.232
1,127
872
5.100
938
938
63
63
50
344
344
1.283
67
256
2.055
10,587
10,585
10,333
3
394
1.232
1,127
872
5.100
1.283
67
256
Total-Public Health Service ........................... .
2,056
Health Care Financing Administration:
Grants to States for Medicaid ........................... .
Payments to health care trust funds
7,787
12,351
7,787
12.351
43,952
34.626
43,952
34.626
43,645
22,353
43,845
22,353
10,335
76
10,335
76
59,970
572
59,970
572
54,559
613
54,559
613
Total-FHI trust fund ............................... ..
10.410
10.410
60.542
60.542
55.171
55,171
Federal supplementary medical insurance trust lund:
Benefit payments ....................................... .
Administrative expenses ................................ .
5,222
145
5,222
145
32.617
32.617
863
30,806
863
634
30.806
834
5,367
5,367
33,480
33,480
31,640
31,640
4
4
8
8
22
22
35.920
35.920
172.609
172,609
153,031
153,031
1,080
171
43
1,080
171
43
8,624
654
178
8,624
654
178
8,684
990
212
8,684
990
212
70
(. ')
70
(. ')
450
450
-2
-2
492
144
492
144
59
241
59
241
408
496
1.395
2,542
496
1.395
2.542
452
1,417
2.555
452
1,417
2,555
256
-23
1,738
1,738
1,560
1,560
2-23
84
84
9
9
Total-Administration lor children and fammes ....... .
2,306
2.306
16,157
16,157
16.515
16,515
Administration on aging .....................................
Departmental management ..... .. . .. .. . . . . . . . . .. .. . . . . .. . . . .
Proprietary receipts from the public ........................ .
Intrabudgetary transactions:
Payments for health insurance for the aged:
Federal hospital insurance trust fund ........ .
Federal supplementary medical insurance trust lund..
Payments for tax and other credits:
Federal hospital insurance trust fund . . . . . . . . .. .
Other .............................................. .
73
20
73
20
-1,657
382
130
382
130
-10,203
480
208
480
208
-9,829
-11,783
-11,783
-32,915
-32.915
-20.632
-20,632
-568
-568
-1,711
-1.711
-1.721
-1,721
26,366
165,240
155,035
158,214
Federal hospital insurance trust lund:
Benefit payments ..... ............................ ..
Administrative expenses ..... .
Interest on normalized tax transfers ......... .
Total-FSMI trust fund
Other ................... .
Total-Health Care Financing Administration .......... .
Administration for children and families:
Family support payments to States ..................... .
Low income home energy aSSistance
Refugee and entrant assistance ......................... .
Payments to States for the job opportunities and basic
skills training program ............................ . .... ..
State legalization impact assistance grants ............. .
Payments to States for the child care and development
block grant .................................. . .... .
Social services block grant ........................ .. .... .
Chldren and families services programs ................ .
Payments to States for foster care and adoption
assistance ..................
. ........... .
Other ...................................................... .
Tolll-Department of Health and Human Services
408
256
1,657
28,023
1,657
11
2
10.203
10,205
3
9.829
9,831
10,330
148,383
Table 5. Outlays of the U.S. Government, March 1996 and Other Periods-Continued
[$ millions]
Current Fiscal Year to Cate
This Month
Classification
I
Gross
Outlays
Cepartment 01 Housing and Urban Development:
Housing programs
Public enterpnse funds
Credit accounts
Federal housing administration lund
Housing for the elderly or handicapped fund
Olher
Rent supplement payments
Homeownershlp assistance
Rental housing assistance
Rental housing development grants
Low-rent public housing
Pubhc housing grants
College housing grants
Lower Income houSing assistance
Section 8 contract renewals
Other
... , .......
Total-Housing programs
PubliC and Indian HouSing programs:
Low-rent public hOUSing-Loans and other expenses
Payments lor operation of low-income housing
prolects
Community Partnerships Against Crime
Other
Total-Public and Indian Housing programs
Applicable
Receipts
I
Outlays
Gross
Outlays
-1APPlic.abl~1
Receipts
Oulla s
y
Prior Fiscal Vear to Cate
Gross _!APPlicablj
Receipts
Outlays
auIIay.
8
6
3
63
36
27
80
54
26
556
-10
59
9
9
52
682
56
-127
-66
59
9
9
52
4.170
217
324
57
52
328
5.283
293
-1,113
-76
324
57
52
328
3,787
329
42
336
1
1.077
938
39
398
2,010
8
4,443
2,915
174
3,932
277
285
68
59
324
(' ')
413
1,804
9
("I
145
52
285
68
59
324
("I
413
1,804
9
4,931
2,470
86
42
336
1
1,077
938
39
("I
398
2,010
8
4,443
2,915
174
4,931
2,470
86
3,116
744
2,372
15,159
5,612
9,547
14,739
4,170
10,569
4
("I
4
244
187
57
254
197
57
225
23
7
1,387
114
42
1,387
114
42
1,325
78
8
.. )
260
1,787
187
1.600
1,665
197
225
23
7
260
(
1,325
78
8
1,468
Government National Mortgage Association:
Management and liquidating functions fund - ........ , ..
Guarantees of mortgage-backed securities ... ............
(")
46
-36
103
396
0)
-293
("')
9
196
421
-226
Total-Government National Mortgage Association ....
9
46
-36
103
397
-294
196
422
-226
360
102
29
10
360
102
19
2,279
578
182
59
2,279
578
123
2.118
582
159
61
2.118
582
97
491
10
481
3,039
59
2,979
2,859
61
2,797
66
5
-19
352
25
251
31
136
6
352
25
-136
-6
233
5
251
31
-233
-5
6,396
14,069
19,742
5,089
14,653
324
94
323
383
236
363
CommUnity Planning and Development:
Community Development Grants
Home Investment partnerships program
............
Other
Total-Community Planning and Development
Management and Administration
Other
Propnetary receipts from the public ..
Offsetting 90vemmental receipts
66
5
19
6
Total-Department of Housing and Urban
Development .............................................
Department of the Interior:
Land and minerals management:
Bureau of Land Management:
Management of lands and resources . . . . . . . . . . .
Other
Minerals Management Service
Office of Surface Mining ReclamatIOn and
Enforcement
Total-Land and minerals management
Water and sCience
Bureau of Reclamation:
Construction program
Operation and maintenance
Other
Central utah proleet
UnIted States Geological Survey
Bureau of Mines
Total-Water and sCience
Fish and Wildlife and parks
United States FIsh and Wildlife Service
National Biological Survey
Na!lOnal Park Service
Total-FIsh and Wildlife and parks
r .)
.............
3,947
3,122
20,465
44
15
58
44
15
58
324
94
323
18
18
176
176
165
165
136
136
916
916
1,146
1,146
21
16
33
6
26
12
3
21
18
17
6
26
9
126
117
191
27
225
79
13
126
117
125
27
225
66
151
130
209
25
265
88
13
151
130
111
25
265
75
19
97
767
80
687
868
111
757
112
12
110
112
12
110
617
62
715
617
62
715
611
65
773
611
65
713
234
234
1.395
1,395
1,449
1,449
116
825
-6
r
16
12
66
383
236
363
98
Table 5. Outlays of the U.S. Government, March 1996 and Other Periods-Continued
[S millions)
This Month
Current Fiscal Year to Date
Prior Fiscal Year to Date
Gross IAPPlicablel
Receipts
Outlays
Outlays
Gross IAPPlicablel
Receipts
Outlays
Outlays
Gross /APPlicablel 0 tl
Receipts
u ays
Outlays
Classification
Department of the Interior:-Continued
Bureau of Indian Affairs:
Operation of Indian programs
Indian tribal funds
Other
Total-Bureau of Indian Affairs
Territorial and international affairs
..............
Departmental offices
Proprietary receipts from the public '
Intrabudgetary transactions , ....
Offsetting governmental receipts ... ,
Total-Department of the Interior .......................
Department of Justice:
Legal activities
Federal Bureau of Investigation
Drug Enforcement Administration
Immigration and Naturalization Service ,.
Federal Prison System
Office of Justice Programs
Other
Intrabudgetary transactions
Olfsetting governmental receipts
Total-Department of Justice
...........................
Department of Labor:
Employment and Training Administration:
Training and employment services
Community Service Employment for Older Americans
Federal unemployment benefits and allowances
State unemployment insurance and employment service
.................
operations
Payments to the unemployment trust fund ....
Advances to the unemployment trust fund and other
funds
Unemployment trust fund:
Federal-State unemployment insurance:
State unemployment benefits
State administrative expenses ..
Federal administrative expenses .
Veterans employment and training
Repayment of advances from the general fund ,
Railroad unemployment Insurance ..
Other.
. ............
Total-Unemployment trust fund
Other
Total-Employment and Traintng Administration
Pension Benefit Guaranty Corporation
Employment Standards Administration:
Salaries and expenses
Special benefits
Black lung disability trust fund
Other
Occupational Safety and Health Administration
Bureau of Labor Statis tics
Other .. ............
Proprietary receipts from the public .
Intrabudgetary transactions
Total-Department at Labor
.............................
156
27
20
203
3
156
27
17
730
139
164
3
200
1,033
7
-2
-162
-24
174
55
7
-2
162
-24
184
485
4,219
10
1,322
1,111
358
1,016
1,537
548
195
-18
61
273
175
1
182
234
143
-30
4
-61
72
920
6,068
31
339
29
31
43
43
1
182
244
143
-30
4
991
339
29
6
807
101
201
8
1,025
1,115
6
1,109
174
55
-869
-121
353
50
938
3
353
50
-938
-112
-3
1,058
3,812
63
358
1,298
987
458
825
1,309
291
432
-27
-358
421
5,214
869
(")
273
175
807
101
207
-121
(")
669
8
730
139
156
-112
(")
(")
957
3,262
4.870
66
1,298
987
458
3825
1,371
291
432
-27
406
1,322
1,111
358
1,016
1,471
548
195
-18
-406
472
5,596
5,635
1,992
202
149
1,992
202
149
2,103
191
140
2,103
191
140
85
85
38
38
573
573
11,249
1,628
127
93
2,304
252
34
15
2,304
252
34
15
12,026
1,584
130
12,026
1,584
130
77
77
11,249
1,628
127
93
7
7
39
10
39
10
35
10
35
10
2,613
2,613
13,865
13,865
13,141
13,141
4
4
37
37
45
45
3,060
3,060
16,329
16,329
16,231
16,231
-245
484
-239
789
15
109
43
9
18
40
27
-1
-87
108
91
271
70
137
125
223
108
91
271
70
137
125
223
121
-345
286
69
149
135
234
-302
2,990
17,537
79
323
15
109
43
9
18
40
27
-87
3,315
325
13
723
3
726
-3
1,010
3
-302
-909
16,811
16,761
1,013
-220
121
-345
286
69
149
135
234
-3
-909
15,748
Table 5. Outlays of the U.S. Government, March 1996 and Other Periods-Continued
[S millions]
Cunent Fiscal Year to Date
This Month
Classification
Gross
Outtays
Department of State:
Administration of Foreign Affairs
Diplomatic and consular programs
AcquISItIOn and maIntenance of buildIngs abroad
Payment to Foreign Service retirement and disability
fund
Foreign Senllce retirement and disability fund
Other
IApplicable
Receipts
I
Outtays
Gross
Outtays
IApplic.able 1 Outtays
Receipts
Prior Fiscal Year to Date
Gross IAPPlicable I 0 tt
Outlays
Receipts
u ay.
175
40
175
40
911
271
911
271
760
265
760
265
38
37
38
37
56
228
184
56
228
184
129
226
266
129
226
266
Total-Administration of Foreign AffairS
290
290
1,649
1,649
1,646
1,646
InternatIonal organizations and Conferences
Migration and refugee assistance
............
Other
Proprietary receipts from the public ....
tntrabudgetary transactions ...........
Offsetting governmental receipts
7B
44
20
78
44
20
521
282
114
521
282
114
1,229
349
49
1,229
349
49
r ')
tOO)
-100
-100
-182
-182
432
432
2,466
2,466
3,092
3,092
1 ,455
17
12
1.455
17
t2
9,089
94
108
9.089
94
lOB
8.735
86
96
B,735
86
96
1.483
1.4B3
9.291
9,291
8,917
8,917
National Highway Traffic Safety Administration
11
11
126
126
127
127
Federal Railroad Administration:
Grants to National Railroad Passenger Corporation
Other .........................................
1
36
1
35
390
138
6
390
131
547
100
5
547
95
37
36
528
6
522
648
5
642
101
211
32
101
211
32
351
1.104
709
351
1.104
709
503
993
830
503
993
830
344
344
2,164
2,164
2,326
2,326
196
196
1,219
1,219
1,123
1,123
116
199
22
185
116
199
22
185
852
1,147
115
1,111
852
1,147
115
1,111
985
1,260
107
1,321
985
1.260
107
1,321
522
522
3.225
Total-Department of State ''''''''''''''''''''''''''''''
Department of Transportation:
Federal Highway Administration:
Highway trust fund:
Federal-aid highways
........... , ..
Other ...............
...............
Other programs ..
Total-Federal Highway Administration .....
Total-Federal Railroad AdministratIon ....
Federal Transit Administralton:
Formula grants ......
Discretionary grants ..
Other .............. .- ..........
Total-Federal Transit Adminislration
Federal Aviation Administration:
..............
Operations
. .. .. ....., .
Airport and airway trust fund:
GrantS-in-aid tor airports
Facilities and equipment
Research, engineering and development
Operations ......... - .........
Total-Airport and airway trust fund
Other
.............................
Total-Federal Aviation Administration
.................
Coast Guard:
Operating expenses .........................
AcquiSition, construction, and Improvements
Retired pay
Other
Total-Coast Guard
Mantime Admintstration
Other
Proprietary recetpts from the public
Intrabudgetary transactions
Offset1ing governmental receipts
Total-Department 01 Transportation
3,225
3,673
(oo)
(oo)
tOO)
(oo)
-1
(oo)
(oo)
(oo]
718
r ')
718
4.445
4,444
4,797
(oo)
4,796
240
12
59
33
(")
240
12
59
32
1,209
173
282
106
3
1,209
173
2B2
103
1,298
127
268
154
3
1,29B
127
268
151
344
r -)
343
1,770
3
1.767
1,846
3
1,844
73
21
98
1
-25
19
307
145
(oo)
(oo)
159
4
2
368
205
80
4
3
288
200
-3
14
-14
39
148
141
-2
7
-39
27
-27
115
2,915
215
18.567
19,234
122
19,111
7
...................
3.D30
14
18,782
3,673
Table 5. Outlays of the U.S. Government, March 1996 and Other Periods-Continued
($ millions)
This Month
Current Fiscal Year to Date
Prior Fiscal Year 10 Dale
Gross IAPPlicablel
Outlays
Receipts
Outlays
Gross IAPPlic8blej
Receipls
Outlays
Oullays
Gro&sjAPPlicable j 0 tl
Outlays
Receipts
u ays
Classification
Department of the Treasury:
Departmental offices:
Exchange stabilization fund
Other
. , . . . . . . ... .
.
Financial Management Service:
Salaries and expenses
Payment to the Resolution Funding Corporation
Claims. Judgements. and relief acts .............
Net interest paid to loan guarantee financing accounts
..................
Other
Total-Financial Management Service
Federal FinanCing Bank
Bureau of Alcohol. Tobacco and Firearms:
Salaries and expenses
Internal revenue collections for Puerto Rico ...
United States Customs Service
Bureau of Engraving and Printing .
United States Mint ..
Bureau of the Public Debt
Internal Revenue Service:
ProceSSing. assistance. and management
Tax law enforcement
...............
Information systems
Payment where earned income credit exceeds liability
for tax
Health insurance supplement to earned income credit
Refunding internal revenue collections, interest
Other
Total-Internal Revenue Service
15
8
-28
8
-806
206
19
19
57
15
4261
-875
206
-1.262
98
57
15
261
119
1,164
440
48
300
119
1,164
440
48
300
126
1.164
389
766
60
126
1.164
389
766
60
352
352
2,071
2.071
2,505
2.505
-113
-113
4
4
8
8
36
36
9
143
3
-11B
46
159
115
91B
159
115
91B
269
151
-353
151
189
108
89B
67
-62
145
189
108
898
67
-62
145
104
291
101
104
291
101
704
2.091
693
704
2.091
693
866
2,046
730
866
2.046
730
7.221
7.221
13.826
13.826
7.878
7.878
242
242
1.145
n
..
1.145
(
(
(
..
)
1.592
3
1.592
3
7.959
18,459
18,459
13.114
13.114
41
26
13
267
187
89
267
-4
14
271
216
85
20.470
269
20,470
269
120.929
50.022
120,929
50,022
114,018
47.967
114,018
47,967
20.139
20.139
170,951
170,951
161.985
161,985
9
40
40
-2.077
25
2.077
-4,037
-583
-4,629
583
3,616
185,459
173.761
9
143
3
64
46
..
1B2
)
7,959
United States Secret Service
Comptroller of the Currency
Office of Thrift Supervison
41
28
15
Interest on the public debt:
Public issues (accrual basis)
Special issues (cash basis)
.............
Total-Interest on the public debt
Other
Proprietary receipts from the public .
Receipts frorn off-budget federal entities
Intrabudgetary transactIOns
Offsetting governmental receipts
Total-Department 01 the Treasury
-12
2
9
.....................
28,671
33
-491
-654
-70
-4.037
70
762
27,909
189,075
15
33
622
)
491
-654
.............
70
191
75
10
-1.272
9B
196
78
271
20
7
2.384
25
-2,384
515
-4,629
-515
3,183
170,577
Table 5.
Outlays of the U.S. Government, March 1996 and Other Periods-Continued
[$ millions)
------- ---_._-_. --_._---
1
Current Fiscal Vear to Date
This Month
Classification
Gross
Outlays
Department 01 Veterans Affairs:
Veterans Health Administration
Medical care
Other
1.297
48
Veterans Beneltts Admlnlstrat on
Pubtlc enterprise lunds
Guaranty and Indemnity fund
Loan guaranty revolving lund
Other
Compensation and penSIOns
ReadJuslment benellts
Post,Vletnam era veterans education account
Insurance funds
NaltOnal service hfe
Untied States government life
Veterans special life
Other
Total-Veterans Benefits AClmlnlstratlOn
... , .............
Total-Environmental Protection Agency
56
29
7
3
95
Out/a
ys
I,Gross
Outlays
1.297
32
7.845
309
63
19
5
1.569
127
5
498
199
69
7.713
649
22
127
2
12
6
598
8
74
10
1.953
9.638
341
473
58
18
IAPPlic.•blel Outlays
Recapta
Gross /Applicable/
Receipts
Outlays
Outlays
7.845
210
7.881
346
185
30
9
7.713
649
22
365
259
94
8,853
665
37
598
8
-15
10
612
9
74
15
631
9.207
10.982
569
10.393
(00)
341
473
316
574
(" 0)
316
574
138
99
313
169
59
89
138
237
201
62
89
22
118
-116
138
(' 0)
(0 ')
(0 OJ
(' OJ
48
48
·1
333
358
6
-333
-6
. 15
.. 358
.. 15
3.287
18,801
17,619
20,085
1,223
18,862
(")
(00)
126
221
113
42
126
221
113
42
20
44
850
1.338
669
280
450
716
1.168
677
470
115
44
850
1.338
669
280
115
5
-5
121
3,059
3.231
496
-5
217
15
1.381
-83
308
15
15
1.591
708
3,468
182
(" ')
502
22
368
9
20
National Aeronautics and Space Administration:
Human space flight
Science. aeronautics and technology
M,SSion support
Research and Clevelopment
Space flight. control and Clata communtCaliOns
ConslrLlctlon 01 lacllttles
Research and program management
Other
Total-National Aeronautics and Space
Administration ............................................
Office 01 Personnel Management:
Governmert payment for annuitants. employees healt,"
and hfe Insurance beneltts
Payment to CIVil service rettrement and disability fu"d
C,v,l service retirement anCl disability fund
Employees IIle Insurance fund
Employees ana 'ettred employees health benefits fund
Other
Intra~uctge:ary transact ens
C,v,l serv,ee 'et"ement and dlsaOtl'ty f""d
General fu"d conlnbu!'O'1S
Other
...............
612
9
15
15
(")
1,182
(")
450
716
1.168
6n
(0 ')
4
470
-150
-250
-4
155
3,077
"1
496
-5
217
1
-1
709
150
250
................
128
57
32
B.853
665
37
22
-1
...............
7.8Bl
20B
("')
20
Generat Services Administrlltion:
Real propeny actIvities
Personal property aCIM!teS
Other
Propnetary receipts from the publiC . .
Total-Office of Personnel Management
17
56
18
Environmental Protection Agency:
Program and research operations
Abatement. control. and comphance
Water Infrastructure financing
Hazandous substance superfund
Other
Proprietary receipts lrom the publiC .
Intrabudgetary transactIons
OIfsetllng governmentat recetpts
Totat-General Services Administration
127
2
15
6
2.048
Construction
Oepanmental admlnlstraltOn
Proprietary recetpts from the publiC
National service life
United States government hfe
Other
Intrabudgetary transactions
Total-Department of Veterans Affairs
139
48
12
1.569
127
5
lA~Plic.ablel
Receipts
Prior Fiscal Ve.r to Oat.
396
481
3,180
368
9
20
1.381
-83
308
(")
("j
(0 0)
396
1.606
424
376
181
48
7
20
2.594
2.233
1.098
335
146
141
3
8
1.065
953
889
2.242
1.071
156
89
7
1.065
953
B89
2.242
1.071
156
89
7
424
376
181
1
1
2.594
2.233
1.098
335
146
141
3
8
1.057
1.057
6,558
6,558
6,472
6,472
305
305
1.733
1.733
1.987
1.987
3.350
12
84
1.303
7.669
8
19.542
814
7.841
14
19.542
-489
172
14
18.946
806
7.737
35
.. 2
-14
-14
16
3.758
29.930
8,972
20.959
29,494
48
7
20
r ")
3.350
136
1.341
B
(")
124
1.257
-2
5.139
1.381
16
1.261
8.027
18.946
-456
-290
35
-16
9,288
20,205
Table 5, Outlays of the U.S. Government, March 1996 and Other Periods-Continued
[S millions]
This Month
Current Fiscal Year to Date
Prior Fiscal Year to Date
Classification
Gross IAPPlicablel
Outlays Receipts Outlays
Small Business Administration:
Public enterprise funds:
Business loan fund .............. .
Disaster loan fund ............... .
Other." .. " ... " " " "" " " " " .. """ ... ''''". "''''
Other
"" ... " .. " ...... "
Total-Small Business Administration
46
24
40
27
6
1
38
68
109
Gross
Outlaya
IApplk:abli
Receipts Outlays
-3
1
38
318
222
6
244
231
168
7
( )
(")
41
791
405
Gross
Outlays
I
Applicable
Receipts
I
I
Outlays
88
186
..
244
291
11
288
386
776
2,701
338
11,627
4
2,701
338
11,627
2,259
365
13,007
13,007
148,688
828
142,789
725
142}89
725
54
(")
17
164
4
288
304
473
169
127
7
Social SeCUrity Administration:
Payments to Social Security trust funds "".", " ... " . " .
Special benefits lor disabled coal miners ................. .
Supplemental security income program " ................. .
Office of the Inspector General ." ......................... .
25
56
2,305
-1
25
56
2,305
-1
Federal Old-age and survivors insurance trust fund (offbudget):
Benefit payments ......... " ....... " ............ " ...... ..
Administrative expenses ........... " ..................... .
payment to railroad retirement account .......... .
Quinquennial military service credit adjustment .......... .
25,253
84
25,253
84
148,688
828
129
129
Total-FOASI trust fund ............................ .
25,337
25,337
149,646
149,646
143,514
143,514
3,714
71
3,714
71
21,087
21,087
19,650
512
512
556
19,650
556
203
203
3,786
21,802
21,802
20.205
20.205
Federal disability insurance trust fund (off-budget~:
Benefit payments ............. "........ .. ............... .
Administrative expenses .. " .. " ......................... .
Payment to railroad retirement account ................. .
Quinquennial mititary service credit adjustment .......... .
Total-FDI trust fund ...
Proprietary receipts from the pubic:
On-budget ...... " .........
Off-budget
Intrabudgetary transactions:
On-budget:
Quinquennial Adjustment for Military Service
Credits from FOASI and FDI: ............ .
Off-budgetS ....... . ............................. .
Total-Social Security Administration .",."." •. ".""
Other independent agencies:
Board for International Broadcasting ....................... .
Corporation for National and Community Service ......... .
Corporation for PubliC Broadcasting ....................... .
District of Columbia.
Federal payment .... .. ... ................ .. ............ .
Other.. ...... .. ............. ..
Equal Employment Opportunity CommiSSion ............... .
Export-Import Bank of the United States .
Federal Communications Commission ....... ........ . .... .
Federal Deposit Insurance Corporation:
Bank Insurance fund ................... ..
Savings association insurance fund "'"
FSLlC resolution fund:
Resolution Trust Corporation closeout ....
Other ................................ ..
Affordable housing and bank enterprise ...... ,.
Total-Federal Deposit Insurance Corporation ....
Federal Emergency Management Agency:
Public enterprise funds
D,saster retief
Emergency management planning and assistance
Other..
. ............. ..
Federal Trade CommiSSion '" ........... ..
Interstate Commerce Commission .. .
legal Services Corporation .... .. .......... .
National Archives and Records Administration ...
National Credit Union Administration:
Credit union share insurance fund .
Central liquidity facility
Other ... ,... ...
. ......... , ............. , ............. .
(")
3,786
4
-94
393
-393
311
6
-6
9
-9
4
-311
-4
315
176,776
100
(' 'J
-25
-332
-2,701
31,384
183,085
("J
40
40
402
-332
-2,701
-2,258
182,683
117 ,091
n
n
220
220
275
275
94
6211
266
457
714
-11
104
-466
1
123
-5
-101
457
1
104
220
65
667
11
59
623
1,343
-720
142
735
'550
-515
-33
516
803
5,608
477
( )
1
275
1,029
-753
1,978
124
183
25
99
183
19
492
1,043
23
8
..)
123
47
8
22
118
-1
15
-1
15
52
2-99
57
3
156
3
97
145
82
34
720
67
-638
(" ')
19
24
a
365
94
-25
31,483
2,259
..
(
..
)
(
(' 'J
-2,258
94
211
286
556
30
714
-11
123
296
49
1,364
24
5,903
528
-4.539
-504
-5,092
326
2,832
1,170
8,928
-6,096
628
541
1
3
7.978
-6.000
5,393
15,987
-10.595
142
351
1.043
117
113
47
257
159
98
1.291
132
6
153
38
20
12
(' 'J
117
10
74
8
118
852
78
12
r 'J
3
1,291
132
159
38
20
227
119
227
22
13
("J
12
93
r'j
92
56
54
2
93
51
42
169
5
-182
..
-13
5
-13
-15
3
-17
-8
2
-11
-13
(
)
17
119
..
(
)
Table 50 Outlays of the UoSo Government, March 1996 and Other Periods-Continued
[$ milNons)
Classification
Other Independent agencies:-Continued
National Endowl'lent lor the Arts
National Endowment lor the HumaMles
National Labor Relations Board
NatIOnal SCience FoundatIOn
Nuclear Regulatory Commission
Panama Canal Commission
Postal Service
Pubhc enterpnse funds (off-budget)
Payment to the Postal Service fund ..
Railroad Retirement Board:
Federal Windfall subsidy ..
. ................. .
Federal payments to Ihe railroad retirement accounts .,.
RBII Industry pension fund'
." ........ .
Benefit payments
Advances from FOASDI fund ....... .
OASDI certlflcallOns ................ .
Administrative expenses ............. . ................. .
Interest on refunds of taxes ........
. ......... .
Other ... .. .....
. ........................... .
Intrabudgetary transactions:
Payments from other funds to the railroad
retirement trust funds .. ..... .. . ......... .
Other
................... .
Supplemental annuity pension fund:
Benefit payments .. ..... ....
. ......... .
Interest on refund of taxes .................. .
Railroad SOCial Security equivalent benefit account:
Benefit payments ....................................... .
Interesl on refund of taxes
.......................... .
Other. .... . ........................................... .
Total-Railroad Retirement Board
OverSIght Board ... ... ........ . .......................... .
Secuntles and Exchange COmrTIISSIOn ..................... .
Smithsonian Institution
............ .
Tennessee Valley Authority ................................. .
United States Information Agency .......................... .
Other ." ............ . ................................... .
Total-Other independent agencies
This Month
Current Fiscel V.er to Dete
Prior FllICel Veer to Dete
Gross lAppliceble I Outtays
Outleys Receipts
Gross IApplicabiel Outlays
Oulley' Receipts
Gross IApplicabiel
Ouaays Receipts Outlays
10
10
12
240
42
48
11
52
4.016
4.690
10
10
12
240
31
Total-Employer share. employee retirement
73
79
79
1.337
1.337
92
81
87
1.263
92
81
87
1.263
243
299
235
8
264
268
·4
-3
323
-25
276
306
31
-674
26.481
28.977
-2.496
24.930
84
27.781
-2.851
84
79
79
119
102
102
128
109
128
')
240
240
1,415
1.415
1.395
1.395
-93
93
-93
-555
-555
93
555
34
23
3
555
34
23
3
-548
548
35
-548
548
35
16
16
3
3
-102
-102
-109
-109
44
1
46
1
46
1
2,470
19
1
2.451
2.451
(' ')
(")
1
1
4.126
4.126
4.077
4.077
558
7
-3
62
-3
209
217
4.763
20
20
r
0)
"
5
5
2-13
-13
1
7
7
44
(' ')
(" 0)
1
413
2-9
413
-9
2.470
(" ')
(' ')
664
664
r 0)
r
0)
558
3
35
7
209
4.564
668
92
(' ')
169
149
3
35
-106
92
20
6,727
6,844
-117
775
119
19
109
62
217
4.266
r ')
297
3.864
899
585
568
(' ')
568
1.317
984
585
333
1.437
1.136
301
45,486
43,680
1,806
48,176
50,281
-2,105
(" 0)
I")
(oo)
(" 0)
Undistributed offsetting receipts:
Other Interest
Employer share. employee retirement:
LegislatIVe Branch:
United Siales Tax Court:
Tax court ludges SUrviVors annuity fund ........... .
The JudiCiary'
JudiCial survivors annuity fund ........................ ..
Department 01 Defense-CIvil:
Military retirement fund ............................... ..
Department of Health and Human Services:
Federal hospital Insurance trust fund:
Federal employer contributions ...................... .
Postal Service employer contributions .............. .
Payments for military service credits ....... .
Department of State'
Foreign Service retirement and disability fund
Office of Personnel Management:
CIVIl service retirement and disability fund
SOCial Secunty administration (Off-budget):
Federal old-age and survivors Insurance trust fund:
Federal employer contributIOns
Payments for mlhtary service credits
Federal dlsablhty Insurance trust fund:
Federal employer contnbutlons
Payments for military service credits
Independent agencies
Court of veterans appeals retirement fund
72
72
73
,")
(" 0)
(" 0)
('1
-·938
-938
-5.552
-5.552
-6.107
-6.107
-100
-43
-100
-43
-910
-910
-241
-909
-909
-241
-276
-276
-12
-12
-55
-55
-55
-55
-804
-804
-5.026
-5.026
-4.843
-4.843
-326
-326
-2.443
-2.443
-2.504
17
-2.504
17
-58
58
-436
-436
-448
-17
-448
-17
(0 ')
(' 0)
14.663
-14.663
-15.141
-15.141
2.282
2.282
18
Table 5. Outlars of the U.S. Government, March 1996 and Other Periods-Continued
[$ miIions)
ClassIflca1lon
Undistributed offsetting receipts:-Contlnued
\merest received by trust fUClds:
The Judiciary:
JU<iciaI SlJ'Vivors annuity fund ......................... .
Department of Defense-Civil:
Corps of Engineers ...............•..•..................
Military retirement fund ................................ .
Education benefits fund ................................ .
Soldiers' and airmen's hane permanent fund ........ .
This Month
Cuuent FISCal Year to Date
Prior FiJC81 Yeer to Date
Gross IApPlicabie I
Outlays Receipts Outlays
OroSll IAppliCabie I
Outlays Receipts Oullays
Gross IAPPIlcablej
Outlays Receipts Outlays
,..
r OJ
)
-2
92
Total-Interest received by flust funds ............. ..
-11
-9
-9
-9
-5.541
-22
-5
-9
-5.541
-22
-5
-2
-11
-11
92
-5.689
-19
-3
-1
-5,689
-19
-3
-1
..
(. ')
( )
C")
''''
-1
-,
-5.232
-601
-5.381
955
-5.381
-955
-1,704
-1,704
-1,351
-1,351
n
-312
-312
-299
-299
-8
-8
-1
-605
-405
-605
-405
-4
-543
-388
-543
-388
-4
-4
-1
-1
(" 0)
-527
(*'
-4
-527
-4
-535
-4
('1
C..,
-1
-1
-1
-,-1
-535
-4
-1
-1
-13
"13
-14.242
-14,242
-13.886
-13.886
-101
-10
-101
-16,676
-1,118
-16,676
-10
-15.285
-851
-15.285
-85,
-349
-349
-105
-45.534
Other .................................................... .
Department of Health and Hllllatl Services:
Federal hospital insurance !nust fund ................ ..
Federal supplementary medical insurance trust fund ..
Department of Labor:
Unemployment trust fund ...................... " ...... .
Department of State:
Foreign Service retirement and dlsabn~y fund ........ .
Oepartment 01 Transportation:
Highway trust lund ..................................... .
Airport and airway trust fund .......................... .
011 spill liability trust fund .............................. .
Oepar1ment of Veterans Affairs:
National service life insurance fin! .................. ..
United States govemnent life InSurance Fund ....... .
Environmental Protection Agency ........................ .
National AeronautiCS and Space Administration ., ....... .
Offic:e of PersomeI Management:
Civil service retirement and disability fund ............ .
Social Security administration (off-tludget,:
Federal oId-age and sllVivors insurance trust fin! .. .
Federal disability insurance trust fund ................ ..
Independent agencies:
Railroad Retirement Board ............................ ..
Other .................................................. ..
Other ..................................................... ..
-11
-29
-21
-29
-21
-5.232
-601
-23
-23
C' .)
-8
-8
-1
r .)
-4
,H)
-1
-1,118
-6
-8
-638
(",
(")
-16
-638
-16
-11
-11
-34
-34
-9
-105
-143
-143
-47.851
-47,851
-45.534
-8
B
Rents and royalties on the outer continental shelf lands ..
1,306
-1,306
-9
1,128
-1,128
Sale of major assets ....................................... .
Spectrum auction proceeds ................................. .
Total-Undistributed offsetting receipts ••••••••••••••••
Total DUIIays .................................. ,............. .
Total CIftoIIudget ... ••• ............................ .........
Total OIf·budgeI ...........................................
Total surplus (+) or deficit ................................
Total on-budget ...........................................
Total off-budget ......................................... ..
200
-200
200
-200
-80,675
-2.424
1.128
208 -2.632
-61.803
==========~===:;:::;===~=~~=~~~~;;;;=~~
152,187
15.900
136.286
-82.514
1,507
-64,021
872.730
99,358
R3,372
164,553
103,520
761.033
7Q,371
111,570
11,204
627.804 697._
75.736
821,514
".175
~,;;=====~========:=:======::§=~=====~:=:==#===~~~~=
108,385
===================================
32,617
4,696
27.921
174.555
28,987
145,568
167,304
27.785
139.519
-47,275
-128,218
-146,650
-51,888
-153,426
-172,778
+4.413
+25.208
+26,125
==================~===========
==========~=======~========~;;;,=
MEMORANDUM
[$ millions]
Receipts offset against outlays
Current
Fiscal Year
to Dale
Comparable Period
Prior Fiscal Year
Proprietary receipts ..................................................... .
Receipts from off~dget federal entities .............................. .
23.654
24.321
transactions ............................................. .
115.653
Govenwnental receipts .................................................. .
T01aI receipts offset ageinst out\ayS .............................. ..
1,494
,40,801
103.061
1.195
128.577
Intrabudgeta~
IOutIays have been illCreesed by $1 million iI September 199510 reftect additiIlnaI reportilg by
the Corporetion for National and Community Service.
'0utJays and collee!ions have been decreased by $119 million in January 1996 10 rellee!
additional reporting by the Federal Deposrt Insurance Corporation.
... No TransactiOns.
t· .) Less than $500,000
Note: DetailS may not add to Iota s due to rounding
1\ncIude$ an adjlslmeI1I 01 $350 rriIion in SepIember 1995 10 report offsetting receiDIs
erronsously reported as outlays by lhe Department 01 Agricuitlll!.
~1\CIUde$ a prior period adjustment.
IQullays have been meased by $5 milion in September 1995 10 reIIecI additional reponing by
1118 Department of Justice.
'Includes $255 mUlion 10' reslitulion 01 lorgone Inlerlst to tile Federal l'Ieti,emenl Tllril1
Investment Board.
lfncIudes FICA and SECA !ale credils. non-contrlbulory rniktary service c:redits. speaal benefits
for 1/18 aged. and credit for unnegotiated OASI hrmefil checks.
19
Table 6. Means of Financing the Deficit or Disposition of Surplus by the U.S. Government, March 1996 and Other Periods
[5 millions)
Net Transactions
(- ) denotes net reduction 01 either
liability or asset accounts
Assets and Liabilities
Directly Related to
Budget Off-budget Activity
Fiscal Year to Date
This Month
..
Llablhty
accounts:
Borrowing from the pubhc'
PubliC debt secufltles. Issued under general FinanCing authorilieS
Obhgatlons 01 the United States, Issued by:
United States Treasury
Federal FinanCing Bank
Account Balallces
Current Fiscal Year
1
Total, pubhc debt securlltes
This Year
Deduct·
Federal sec unties held as investments 01 90vernment accounts
(see Schedule OJ
Less discount on lederal securities held as Investments 01
government accounts
Net lederal securities held as Investments of government
accounts
Total borrOWing Irom the public
Accrued interest payable to the public ....
Allocations 01 speCial draWing rights
Deposit funds
Miscellaneous hability accounts (includes checks Outstanding etc.)
Total liability accounts ................................................... .
Asset accounts (deduct)
Cash and monetary assets:
U.S. Treasury operating cash:'
Federal Reserve account
Tax and Joan note accounts
Balance ...
Prior Year
I
This Year
I This Month 1
Close of
This month
143.803
171.366
4.958.983
15.000
5.002.041
15.000
5.102.786
15.000
100.746
143.803
171.366
4.973.983
5.017.041
5.117.786
-8
-328
-46
-1.573
-48
2.761
1.236
81.231
1.198
79.986
1.190
79.658
101.066
145.331
168.557
4.893.989
4.938.253
5.039.319
-666
8.547
-1.743
26.962
36.174
35.508
100.400
153.878
166.813
4,920.950
4.974.428
5.074.828
62.553
40.832
41.570
1.320.800
1.299.079
1.361.632
342
753
372
3.188
3.598
3.940
Agency securities. Issued under special financing authorities (see
Schedule B lor other Agency borrowing. see Schedule C) , ..... .
Total lederal securities
I
100.746
Plus premium on pUbliC debt securities
Less discount on pubhc debt seCUrities
Total pubhc debt secunties net of Premium and
discount
I
I
Beginning of
62.211
40.079
41.199
1.317.612
1.295.481
1.357.692
38.189
113.798
125.615
3.603.338
3.678.947
3.717.136
15.599
-37
-22.466
12.387
642
-221
-1.225
6.954
920
456
2.313
8.149
50.611
7.380
8.186
4.813
35.654
7.196
29.426
-620
51.253
7.159
6.960
11.767
43.672
119,947
137,454
3,674,329
3,750,604
3,794,276
1,389
-10,672
-1.599
-14.477
-2.305
-15.540
8.620
29.329
5.632
25.525
7.021
14.853
-9.283
-16.075
-17.845
37.949
31.157
21.874
-57
14
1.680
11.035
-10,168
11.106
-10.168
11,049
-10.168
-57
14
1.680
867
938
881
-198
512
-3
-1.197
1,014
-5
2.470
555
-7
31,762
8.196
-26.315
-105
31,762
7,197
-25.814
-107
31,762
6,999
-25.302
-110
SpeCial draWing rights:
Totat holdings ..
SDR certificates issued to Federal Reserve banks
Balance
Reserve posillOn on the US quota in the IMF:
U.S. subscription to International Monetary Fund:
Direct Quota payments
Maintenance of value adJustments
Letter 01 credit issued to IMF
Dollar depOSits With the IMF ..... , ...
Receivable/Payable ~-) for intenm maintenance 01 value
adJustments
123
753
-1,672
1,145
1,774
1,898
434
565
1.347
14.682
14.813
15.247
207
-308
3,295
(. 'j
30,525
( )
30,010
(")
30,216
8.699
-15.805
-11.524
84,023
76,918
68.219
Net activity. guaranteed loan finanCing
Net actIVIty, direct loan finanCing
Miscellaneous asset accounts
342
1.135
4.303
-126
6,975
685
-839
3.325
197
-12,714
19,732
-1,725
-12.498
25.571
-5,342
-12,840
26.706
-1,040
Total asset accounts .................................................... .
3,603
8,271
8,841
89,316
84,648
81,045
Ellcess of liabilities (+1 or assets (-) ................................... .
+47,275
+128,218
+146,295
+3,585,012
+3,665,955
+3,713,231
+3,585,012
+3,665,955
+3,713,231
Balance
Loans to InternatIOnal Monetary Fund
Other cash and monetary assets
Total cash and monetary assets
Transactions not applied to current year's surplus or delicit (see
Schedule a for Details)
Total budget and off-budget federal entities (financing of deficit (+)
or disposition ot surplus (--j) ........................................... .
..
355
+47,275
'MaiO' sources ('f ,"formaM" used to Cletenn'ne Treasury s operating cash Income InctuCle
Federal Reserve Banks the Treasury RegIonal FInance Centers the Internal Revenue Service
Centers. tne Bureau o! tne PuOllC Deot anCl varous electronIC systems DepoSits are reflected as
+128,218
+146,650
No TransactIOns
f' .) Less than $500.000
Note' Details may not ada to totals cue to rounc1ing
recel\led anC! \" thcrawais are re f lec1ecl as proceSSed
20
Table 6. Schedule A-Analysis of Change in Excess of Liabilities of the U.S. Govemment, March 1996 and
Other Periods
[$ millions]
Fiscal Vear 10 Date
C....ificallon
This Month
This Year
Excess of liabilities beginning of period:
Based on composition of unified budget in preceding periOd
Adjustments ruring current fiscal year for changes in composition
of unified budget:
Revisions by federal agencies to the prior budget results ..... .
I Prior
Year
3,665,951
3,584,970
3,422,146
4
43
-268
I
I
Excess of liablities beginring of period (current basis) , .............. .----------------------~-3,665,955
3,565,012
3,421,878
============~~~
Budget surplus (-) or deficil:
Based on composition of uniflld budget in prior fiscal yr .......... .
ChangeS in composition 01 unified budget ........................... .
47,275
128,218
146,650
-------------------------47,275
128,218
146,650
===================
Total-on-budget (Table 2) ................ , ............................ .
51,688
153,426
172,776
Total surplUS (-) or de1iCit (Table 2) ................................... .
==============~=
Totai-off-budget (Table 2) ............................................ ..
TransactionS nOI applied to current year's surplus or deficit:
-4,413
-25,208
-26,125
===================
Seigniorage ........................................................... ..
Profit on sale of gold ................................................ ..
-355
("")
----------------------~-Total-transactions not applied to current year's Surplus or
deficit ........................ , ..................................... ..
-355
===================
3,713,231
3,713,231
3,568.173
ExcesI of liabilities close of period ....... , •• , ....................... .
Table 6, Schedule B-Securities Issued by Federal Agencies Under Special Rnancing Authorities, March 1996 and
Other Periods
[$ millions]
Net Transactions
(-) denotes net reduction of
liability accounts
Account Balances
Cunent FIscal Vear
C....lflcallon
Beginning 01
Fiscal Year to Date
This Month
This Vear
Agency securitiea, issued under special financing auIIIorities:
Obligations of the United States, Issued by:
Export-Import Bank 01 the United Slates ............................... .
Fadaral Deposit Insurance Corporation:
FSLIC resolution lund ................................................ ..
Obligations guaranteed by the United States, issued by:
Department of Defense:
Family housing mortgages ............................................ .
Department of Housing and Urban Development:
Federal Housing Adninistration ...................................... ..
Department 01 the Interior:
Bureau of land Management ........................................ ..
Department of Transportation:
Coast Guard:
Family housing mortgages .......................................... .
Obligations not guaranteed by the United States, issued by:
Legislativa Branch:
Architect of the capitol ............................................... .
Department of Defense:
HOOIeowners assistance mortgages ................................. ..
Independent agenCies:
Farm Credit System Finandal Assistance COrporation ............... .
National Archives and Records Administration ...................... -.
Postal Service ......................................................... .
Tennessee Valley Authority ........................... -............... .
TOIaI, agency securities ........................... " ............ ..
-32
17
-35
-1
..
I
Prior Vear
-32
-47
-1
This Vear
21
This Month
n
(,'J
n
158
126
126
6
6
6
87
35
52
13
13
13
( )
..
r ')
( )
182
180
181
(")
( )
1,261
293
4,665
28.911
35,508
( )
... No Transacticrls.
(' ') less than $500.000.
Note: De...s may not add 10 totals due to rounding.
I
Cloaaof
lbi. month
-2
1.261
295
-685
-2
4,665
3,951
-1,662
24,960
1,261
293
4,665
29,595
-666
8,547
-1,743
26.962
36,174
..
..
Table 6.
Schedule C (Memorandum)-Federal Agency Borrowing Financed Through the Issue of Public Debt Securities,
March 1996 and Other Periods
[$ millions)
Account Balances
Current Fiscal Year
Transactions
Classification
Beginning of
Fiscal Year to Date
This Month
I
This Year
Borrowing from the Treasury:
Funds Appropriated to the President
International Secunty Assistance
Foreign military loan program
Agency for International Development
International Debt Reduction
HOUSing and other credit guaranty programs
Private sector revolving fund
Overseas Private Investment Corporation
Department of Agnculture
Farm Service Agency
Commodity Credit Corporation
Agricultural credit Insurance fund
Natural Resources Conservation Service
Rural Utilities Service
Rural electrification and telephone revolving fund
Rural Telephone Bank
Rural development Insurance fund
Rural communication development fund
Rural housing and Community Development Service'
Rural housing Insurance fund
Self-help houSing land development fund
Rural Business and Cooperative Development Service:
Rural development loan fund
Rural economic development loan fund
Foreign Agricultural Service
Department of Education'
Federal direct student loan program
Federal family education loan program
College housing and academiC facilities fund
College housing loans
Department of Energy
Isotope produCllOn and dlstrlbullOn fund
Bonneville power administration fund
Department of Housing and Urban Development·
Housing programs
Federal Housing Administration
HOUSing for the ederly and handicapped
PubliC and Indian housing
Low-rent publiC housing
Department of the Interior
Bureau of Reclamation Loans
Bureau of Mines. Helium Fund
Bureau of Indian Affairs
RevolVing funds for loans
Department of Justice
Federal prison Industries Incorporated
Department of Transportation
Federal Highway Administration
High priority quarters loan fund
Federal Railroad Administration
Railroad rehabilitation and Improvement
financing funds
Amtrak comdor Improvement loans
Other
Federal AViation Administration
Aircraft purchaSe loan guarantee program
Minority bUSiness resource center fund
Department of the Treasury
Federal Financing Bank revolving fund
Department of Veterans Affairs
Guarartv and Indemnity fund
Loan guaranty revolving fund
DlrE'ct loan revolving fund
NatIVe amer can veteran houSing fund
Vocational rehabilitation revolving fund
-1
1.131
21
22
335
125
1
52
335
125
1
71
335
125
1
73
-6.B36
604
-B,196
-1,748
6,987
1,605
4
151
2,209
4
151
2,209
4
678
-20
220
720
85
715
8,666
664
2,806
25
9,344
644
3,026
25
9,344
644
3,026
25
951
1,192
1
5,353
6,304
6.304
(" "J
("J
n
17
40
8
97
61
30
563
78
30
563
78
30
563
7,607
4,868
5,067
18
1,134
184
360
12,674
1,134
1B4
359
12,674
1,134
184
359
2,563
2,653
2,448
1,579
6,909
1,579
6.909
-115
-14
-5
-68
-805
-770
1,647
7,714
-135
20
-21
9
26
252
26
252
28
28
28
20
20
20
40
32
32
32
(" ")
(" "J
3
(" ")
(" "j
3
(
(" "J
(" "J
(" "J
(" "J
.. )
3
(' "J
14
(" ")
15
(" ")
7
22
22
-17,572
-11,091
69,297
53,037
51.125
1,161
722
586
903
302
1,272
1
7
2
1,463
1,994
1
25
1,463
1,994
1
25
(" "J
22
20
17
252
8
(. 'j
This Month
1.131
20
-1.312
I
7BB
(" ")
-205
This Year
337
343
3
Prior Year
Close of
This month
18
-1
r
"J
12
(" "J
Table 6, Schedule C (Memorandum).-Federal ~gency Borrowing Financed Through the Issue of Public Debt Securities
March 1996 and Other Periods-Continued
'
[$ millions)
Account Balances
Current Fiscal Year
Transactions
Classification
Fiscal Year to Date
This Month
This Year
BorrOWing from the Treasury.
Beginning 01
1
Prior Year
This Year
Close 01
This month
I
This Month
Contmued
EnVironmental Protection Agency:
Abatement, control, and compliance loan program
Small BUSiness Administration:
BUSiness loan and revolving fund
Disaster loan fund
Independent agencies:
Distnct of Columbia .
Export-Import Bank of the United States
Federal Emergency Management Agency
National Insurance development fund
Disaster assistance loan fund
Pennsylvania Avenue Development Corporation
Land aqulsltion and development fund
Railroad Retirement Board
Rail Industry pension fund
Social Security equivalent benefit account
Smithsonian Institution
John F. Kennedy Center parking faCilities
Tennessee Valley AuthOrity
10
-13
37
47
47
342
7,999
342
7,999
329
7,999
30
147
2,665
379
2,723
379
2.723
268
169
222
503
222
609
185
65
85
85
2,128
2.628
2,128
4.104
2.128
4,374
20
150
20
150
20
150
-13
232
59
106
-37
270
Total agency borrowing from the Treasury
financed through pubfic debt securities issued
11
341
-37
1,546
1,516
-1,168
-10,920
-10,584
134.892
125,140
123,972
-48
-136
-150
3.493
3.405
3,357
-55
-55
-610
1.470
1,470
1,415
9
-227
-24
21,875
3,675
21,639
3,675
21,648
3.675
-685
-760
21,700
21,015
21.015
-49
-47
1,624
-192
1,624
-242
1,624
-242
-18
33
33
33
-62
-8
-58
--14
1.689
89
1,627
84
1,627
81
-1
-1
21
20
20
-3
14
13
13
Borrowing from the Federal Financing Bank:
Funds Appropriated to the President:
Foreign military finanCing program
Department of Agriculture'
Farm Service Agency:
AgflCcllture credit insurance fund
Rural Utilities Service:
Rural electrification and telephone revolving fund
Rural de,elopment Insurance fund
Rural hOUSing and Community Development Service
Rural housing insurance fund
Department of Defense:
Department of the Navy
Defense agencies
Department of Health and Human Services
Medical faCilities guarantee and loan fund
Department of Housing and Urban Development
Low rent hOUSing loans and other expenses
Community Development Grants
Department of Intenor
Terrltonal and international affairS
Department of Transportation:
Federal Railroad Administration
Federal Transit Administration
General Services Administration:
Federal bUlldm9s fund
Small Business AdminlstratJOn:
BUSiness loan fund
Independent agenCies'
Export-Import Bank of the United States
FSLlC resolution fund
Resolution T rust Corporation closeout
Pennsylvania Avenue Development Corporation
Postal Service
Tennessee Valley Authority
Total borrowing from the Federal Financing Bank
-3
-1
(")
-665
.0 . . . . 00.0 . . . 0.-
-1
-12
102
1.893
1.882
1,881
-5
-25
-62
361
342
337
-35
-498
-777
2,506
2,044
2,008
-1,181
7
-5,704
55
-6,965
-3,200
-6.763
58
-1,100
-200
13,209
374
7,265
3,200
8.686
421
300
7,504
429
300
-1,312
-17,572
-11,092
84,298
68,038
66,726
No Transactions
Note ThiS table Includes lendl~ by the Federal FinanCing Bank accomplished by the purchase
(' 0) Less than $500,000
of agency finanCial assets. by the acquls,1IOn of agency debt secuntles, and by dlfect loans on
behalf of an agency The Federa FinanCing Bank borrows from Treasury and Issues Its own
Note Details may not add to totals due to rounding
securities and In turn may loan these funds to agencies In lieu of agencies borrOWing directly
througn Treasury or Issumg their own seCUrities
23
Table 6,
Schedule D-Investments of Federal Government Accounts in Federal Securities, March 1996 and
Other Periods
[5 mIllions)
---
-
Securities Held as Investments
Current Fiscal Year
Net Purchases or Sales ( )
ClassIfication
~
I
Beginning ot
Fiscal Year to Date
I
ThIs Year
I
I
This Year
Prior Year
Federal funds:
Df'f",<Hl rl lt
J
flt
1
5
of Aqr,culture
Df'rl,JrlnH'nl of Cl!mmerce
D~)Pdrtf1l{'Il!
2
2
.......... , ..........
Month
20
1
23
2
18
(' ')
4
71
554
321
1
4.951
1
5.575
5.504
599
822
-571
6.678
6901
7.500
t
15
-15
4.460
4,496
-11
537
220
37
2.588
4.210
1
209
3.431
5.796
481
2,559
219
3.472
5.721
399
2,896
188
3.445
5.975
409
4.105
38
526
4
39
535
4
40
531
(' ')
6
8
38
27
1S8
22
135
350
323
56
142
33
752
516
-193
4.597
509
-573
21.017
3.600
528
21,825
3.974
302
21.769
4.116
335
11
566
-149
-34
523
384
178
271
-120
192
1740
-2.701
198
374
3.325
1.249
1.242
1,422
2.978
3,280
1.206
1.775
1.599
3,160
3.291
1.772
1,626
1,600
3.249
--31
27
254
10
1.209
286
-1
-21
14
179
-72
1.546
1
4
2
5
36
I
89
250
4
2.584
5.901
-16
2.408
64.399
16
67.716
70,300
2,584
5,885
2,408
64,415
67,716
70,300
9
14
5
32
14
5
32
Total publIC debt securlt.es
Total agency securities
Total Federaf funds
j This
4
of De ' er1'7>€-- MilItary
Defersp CC)()pflf<-l.tlnn (lCColmt
Departmert of Energy
Depanment of HOUSing and Urban Development
HOUSing programs
Federal housln'j admHllstratlon lund
Government National Mongage ASSOCiation
~anagement and liquidating lunctlons fund
Agency securities
Guarantees of mortgage-backed securttles
PubliC det·t securities
Agency seCUrities
Other
Department of the Interior
Department 01 Labor
Department of TransportatIon
Department of the Treasury
Department of Veterans AffairS
Canteen service revolVing furd
Veterans reopened Insurance fund
Servicemen 5 group Ille Insurance fund
Independent agencies
ExporHmport Bank of the United States
Federal DepOSit Insurance Corporation
Bank Insurance fund
Savings aSSOCIation Insurance fund
FSlIC resolutIon fund
Federal Emergency Management Agency
National flood Insurance fund
National Credit UnIon AdministratIon
Postal Service
Tennessee Valley AuthOrity
Other
Otller
Close ot
ThIs month
This Month
Trust funds:
LegiS atlve Branch
Library of Congress
United States Tax Court
Other
The J udlelary
JudiCial retirement funds
Department of Agnculture
Department uf Cornrnerce
Department of Defense-Military
\/Jluntary separation Incer'tlve fund
Other
Department of Defe1se-CtVlI
Military retirement fund
Other
(oo)
r ')
2
(oo)
I' ')
1
5
13
5
31
-2
10
43
56
36
16
287
310
331
356
330
366
0)
(oo)
(' 0)
(oo)
r
-5
2
200
-20
(' 0)
685
88
889
1
67
885
69
-1.558
-1
6.614
130
10284
52
112.963
1,495
121.135
1.625
119.577
1.624
24
Table 6. Schedule D-Investments of Federal Government Accounts in Federal Securities, March 1996 and
Other Periods-Continued
[$ millions]
Securities Held as Investments
Current Fiscal Year
Net Purchases or Sales (-)
Classification
Beginning of
Fiscal Year to Date
This Month
This Year
1
Prior Year
This Year
I
Close of
This month
This Month
J
Trust Funds-Continued
Department of Health and Human Services'
Federal hospital Insurance trust fund
Federal supplementary medical insurance trust fund
Other
Department of the Intenor
Department of Justice
Department of Labor
Unemployment trust fund
Other
Department 01 State
Foreign Service retirement and disability fund
Other
Department 01 Transportation:
Highway trust fund
Airport and airway trust fund
Other
Department of the Treasury
Department of Veterans Affairs
General post fund, national homes
National service life Insurance
United States government life Insurance Fund
Veterans speCial life Insurance fU1d
EnVIronmental Protection Agency
National Aeronautics and Space Administration
Office of Personnel Management:
C,Vil service retirement and disability fund:
PubliC debt securities
Agency securities
Employees life Insurance fund
Employees and retired employees health benefits fund
Social Secunty AdmlnistrallOn
Federal old-age and survivors insurance trust fund
Federal disability Insurance trust fund
Independent agencies
Harry S Truman memOrial schOlarship trust fund
Japan United States Friendship Commission
Railroad Retirement Board
Other
1,510
8,373
56
-93
5
-3.792
9,204
58
59
77
1,034
-1,675
87
24
47
129,864
13,513
992
315
127.583
14.345
994
467
72
126,072
22,718
1,050
374
77
-2,088
46
-3,018
-2,099
7
47,141
77
46,212
32
44,123
78
-27
-2
254
-29
365
-9
7.801
29
8.082
2
8,055
-331
-488
-7
-14
785
-1,195
29
-21
1,349
-751
144
-19
18,531
11,145
1,880
235
19.648
10,439
1.917
228
19.317
9.950
1.909
215
("")
-1
66
('")
36
11,954
106
1,546
7,243
16
35
12,099
103
1,570
7,494
16
35
12,011
102
1,561
7,377
16
1,985
366,126
-12
-81
-6,516
7,B65
488
-153
456
298
15,839
7,890
305,690
7,865
16,339
7.817
359,610
7,865
16,327
7,736
2,541
1.191
16,790
5,861
5,929
20,520
447,947
35,225
462.196
39.896
464,737
41,087
(")
1
1
972
1
(")
339
127
54
16
14,440
544
55
16
15,156
540
55
18
15,413
-88
-1
-9
-117
57
-4
15
133
n
(" ')
53,920
2
257
1
-3
-4
16
524
("")
542
59,969
27.082
7,865
39,162
1.256,385
1,223,498
7,865
1 .283.4e7
7,865
Total trust funds ..... - ....... " " " " " " " " ....................
59,969
34,947
39,;'162
1,256,385
1,231,363
1 ,291 ,332
Grand lola I .............. "', .. , .. " ..... " "."" .... , ......................
62,553
40,832
41,570
1,320,800
1,299,079
1,361,632
Total public debt securities
Total agency seCUrities
Note Investments are in publiC debt seCUrities unless otherwise nOled
Nole Details may not add to totals due to rounding
No Transactions
(. 'J Less than $500.000
25
Table 7. Receipts and Outlays of the U.S. Government by Month, Fiscal Year 1996
[$ millions]
----,._-_..
I
Classification
Oct.
Nov.
Dec.
Jan.
Feb.
March
April
May
July
June
:
Aug.
I Sept.
Fiscal
Year
To
Date
Com·
parable
Period
Prior
F.Y.
!
Receipts:
Individual Income laxes
Corporation Income taxes
.,.'
Social Insurance taxes and
contnbutlons:
Employment taxes and
contnbullOns
..
.. ........
Unemployment insurance
Other retirement contributions . . . . . .
Excise taxes
... , " , .....
.......
Estate and gift taxes
Customs dulles ..........................
Miscellaneous receipts . -, .............
Total-Receipts this year
...........
51.840
2,160
39.524
1,694
53.179
38,021
66.192
5.158
40.327
1.692
22,523
15.460
293,584
64.205
274,680
56.650
30.549
1.214
342
4.453
1,160
1.786
2,070
34,919
2.940
340
5.154
1,349
1.593
2.496
37.123
223
416
4.870
1.383
1.439
1,618
40,742
1.061
374
4.241
1,288
1,482
2,364
36,011
2.546
403
4.308
1,090
1,456
1,517
41.066
256
419
4.133
1,137
1.528
2.467
220.430
8.261
2.294
27.159
7.405
9,284
12,532
214,061
8.571
2.275
27.680
6.653
9,865
13,949
95.593
90.008 138.271 142.922
89.349
89.011
645.154
......
......
.. , ...
IOn·budget) ........................
72.200
63.651 110.322 110.615
60,913
56,677
474.378
IOtl·budget) ........................
23.393
26.357
32.307
28.437
32.334
170.776
T"I<1I-R<'L"l'/PIs PTlO, .rear
89.0!4
87.673 130.8/0 131.801
8::.544
9::.5.C
614 ..Ui.i
IOn hlldgelJ
65.384
61.083 103.860 10/.036
54.405
61.9"0
448,7.18
23.639
25.590
J6,950
30.765
J8.UIJ
jO.56~
165.644
175
197
14
173
196
14
158
226
14
262
320
18
199
212
15
162
215
25
1,129
1.366
99
1.464
1,406
112
120
764
239
138
2,012
104
3.377
4,353
801
-199
256
183
240
-286
585
350
261
67
416
305
2.559
421
2,761
10
820
4.990
353
2.104
4,436
280
352
3.888
250
112
4.138
363
-31
3.713
307
-313
4.229
287
3.043
25,394
1.842
9.438
25.585
1,770
3,033
5.957
3.616
5,927
6.721
3.250
8,009
7.265
3.924
3,325
7.723
4.579
5.760
7,579
3.396
5.552
7,562
4,562
31.606
42,806
23,328
35,556
44,477
28,972
2.645
535
307
2.689
611
287
2.905
635
296
2.985
543
337
2.878
429
283
3,199
517
327
17.301
3,269
1,836
17.733
3.197
1.669
796
381
17.270
1.105
-328
20.262
702
253
23,988
-145
24
19,371
182
-28
20.478
-61
-101
21,556
2.579
201
122,926
-1,165
-351
130,088
2,660
2.056
1.495
2.707
2,336
1,383
2.593
1.891
1,498
2.718
3.624
1.139
2.853
2,568
1,285
2.664
2,620
1,222
16,194
15,096
8,022
15.656
16.207
8,927
1.902
1.696
1.478
1.632
1,821
2.055
10,585
10.330
7.252
9.082
8.071
9.869
6.702
10.302
6.730
10,169
7.411
10,709
7,787
10.410
43.952
60.542
43,845
55.171
5.367
3,934
5.913
3,792
6.032
3.577
5.758
6,161
5.043
4,814
5.367
12,356
33.480
34.635
31,640
22.375
2.426
-5,545
2.972
-5,485
2.607
-4.931
3.051
-8,049
2.795
2.306
-6,390 -13,915
16.157
··44.316
16.515
-31.494
1,087
641
809
2.350
477
985
2.701
499
838
2.646
536
1,112
2.162
624
933
3.122
485
920
14,069
3,262
5.596
14,653
3,812
5.214
1.786
730
531
1.864
957
341
2.133
298
439
2,872
661
300
2.596
-76
423
2.613
377
432
13.865
2,946
2.466
13,141
2.608
3,092
1.632
1,873
1.492
1.315
1.401
1.471
9.183
8.821
(011 hlldge/!
..........
27.949
Outlays
....
legislative Branch
... " "
The JudiCiary ........ ............. . ....
Executive Office of the President .......
Funds Appropriated to the President:
Intemational Security Assistance .....
Intemational Development
Assistance ....... , ...................
Other .... .............................
Department of Agriculture:
Commodity Credit Corporation and
Foreign Agricultural Service .......
Other ...... .........................
Department 01 Commerce - ............
Department of Defense:
Military:
Military personnel ...................
Operation and maintenance ........
Procurement ...... ............
Research. development. test. and
evaluation .........
Military construction ................
.... ---_ ...
Family housing
Revolving and management
. __ ................ .....
funds
............
...........
Other
Total Military .............
...
....
Civil
.. ......
"""
Department of Education ... ......... ..
Department of Energy ." ..............
Department of Health and Human
Services:
PubliC Health ServICe ..............
Health Care Financing Administration:
Grants to States for Medicaid ...
Federal hospital ins. trust fund ...
Federal supp. med. Ins. trust
..... .... . . . . . . . . .
fund
....
.......... ......
Other
Administration for children and
... ....
...
families
....
.....
Other
epartment of HOUSing and Urban
.. ......
Development
epartment of the Intenor .. ..... ..
...
De partment of Justice
De partment of labor'
Unemployment trust fund .
Other
..
De partment of State
epartment of TransportatlOl1:
Highway trust fund
..
o
o
o
26
Table 7. Receipts and Outlays of the U.S. Government by Month, Fiscal Year 1996-Continued
[$ millions]
Oct.
Classification
Nov.
Dec.
Jan.
Feb.
March
April
May
June
July
Aug.
Sept.
Com·
parable
Period
Prior
F.Y.
Fiscal
Year
To
Date
Outlays-Continued
1.506
1,427
1.630
1.800
1.578
1,443
9.384
10.290
21.631
-30
26.006
-1.053
60.676
1.146
20.923
406
20.977
6.870
20.739
7.171
170.951
14.507
161.985
8.592
101
75
1
1.442
484
339
1,488
63
1
1.710
538
389
2.911
63
1
1,441
435
477
83
83
1
1.985
595
-393
1.561
91
1
1.231
526
382
1.569
105
2
1.612
481
396
7.713
480
8
9.419
3.059
1.591
8.853
474
9
9.526
3.077
709
1.128
3.576
16
1.119
3.418
238
973
3.576
76
1.208
3.379
-9
1.073
3.252
23
1.057
3.758
41
6.558
20.959
386
6.472
20.205
473
24.544
24.413
25.064
25.126
25.163
25.337
149.646
143.514
3.516
174
3.475
2.233
3.773
3.941
3,581
254
3.671
2.372
3.786
2.261
21.802
11.235
20.205
13057
-609
-69
20
-110
-10
59
-720
4.539
-40
-14
-82
-235
~2
-142
~515
-504
-1.502
407
-840
87
-638
-71
-797
-37
-676
-27
-638
-33
-5.092
326
-6.096
541
(")
......
(")
(OO)
(OO)
(oo)
1
3
-374
-61B
333
-8B3
-280
-674
-2,496
-2.851
..3
79
(oo)
( )
(oo)
(oo)
(oo)
186
1,792
96
1.069
106
1.408
~108
1.655
-106
1,417
558
297
9,368
84
-3
899
10.361
-2,365 -2.562
-5.736 -40.465
-2.491
-65
-2,559
-1.028
-2,282
-143
14.663
47,851
-15.141
-45.534
-121
-322
-295
-8
-1.306
-200
-1.128
-200
118,352 128,458 132,984 123,647 133.644 136,286
773,372
......
98,056 105,111 108,365
627,804
......
27,921
145,568
......
-22,758 -38,450 +5,286 +19,274 -44,295 -47,275
-128,218
......
(On-budget) ........................ -19,951 -38,116 -11,431 +12,558 -44,799 -51,688
-153,426
......
+504 +4,413
+25,208
......
38,189
113,798
125,615
........ ,
Other.
Department of the Treasury:
Interesl on the public debt .....
. .. .. .. .....
Other
Department of Velerans Affairs:
Compensation and pensions
National service Ille ......... ....
United States government life ......
........
. . .. . .......
Other
Environmental Protection Agency
General Services Administration . . . . , . . .
National Aeronautics and Space
.....
Administration
... ....
Office 01 Personnel Management
Small Business Administration
Social Secunty Administration:
Federal Old-age and survivors ins.
trust fund (off-budget) .... ....
Federal disability ins. trust fund (off......... ........
budget) ..
.. .. ....... ..
Other.
Independent agencies:
Fed. Oeposit Ins. Corp:
........
Bank insurance fund
Savings association insurance
fund
...... ..... ...
FSLlC resolution fund:
RTC closeout . ...... ........
.... ".
Other ..
Affordable housing and bank
enterprise . .....
..
Postal Service:
Public enterprise funds (off..... .....
budget)
Payment to the Postal Service
.........
fund
Oversight Board
Tennessee Valley Authority
Other independent agencies
Undistnbuted offsetting receipts:
Employer share. employee
retirement
..............
Interest received by trusl funds
Rents and royalties on outer
continental shelf lands
......
Other
,"
55
556
123
2.026
-2,404
-415
-361
-200
(")
(oo)
21
(")
(")
Totals this year:
Total outlays
.........................
(On·budget) ........................
92,151 101,787 121,753
(Off-budget) ........................
26,691
Total-surplus (+) or deficit (-)
.....
(OII·budget) .... , ...................
Total borrowing from the public ....
TOlal·ourlan pnor rear
.....
26,201
-2,807
13,353
11,231
25,591
-334 +16,711
+6,716
38,339 -18,358
-4,747
27,933
41,022
120.]65 124.915 W.oJJ //6.166 120.899 143.074
'61.033
I>:J514
(On·hlldXcl)
95.]07
99.464 /24.3/6
90.88]
94.42/ /J 7.123
(O(l-hlld.~('1)
25.059
25.452
1/297
25.282
26,478
25.95/
IN.iI C;
-31.342 -37.242
-{80]
+/5.635 -38.355
-50.543
-·146,6'IJ
-29,922 -37.38/ -20,456 +/O.I5! -40.016 -55.153
-I ':. ;-6
+4.610
+;().1:!5
TOlal'Il/fplll\ (~) or de/ie'it (-) prIOr
.I·ear
(Oll·hl/d.w)
(OIJ·blld~('1)
-1.420
+138 -'-15.653
+5.483 +I.MI
No transactions.
(' -) Less than $500.000
Note: Details may not add to totals due to rounding.
27
Table 8. Trust Fund Impact on Budget Results and Investment Holdings as of March 31, 1996
--.--_._----
-
[S millions]
--------_..
Classification
TruSI receipts. outlays. and investments
held:
Alrpon and airway
Black lung dlsabtllty
Federal disability Insurance
Federal employees ble and health
Federal employees retirement
Federal rospllal Insurance
Federal Old-age and SUrviVorS Insurance
Federal supplementary medical Insurance
Highways
MIlitary advances
Railroad retirement
Mlhtary retirement
Unemployment
Veterans life insurance
All olner trust
,
This Month
i
I
!
ReceiPts. 1 Outlays
I
Excess
1
Securities held as Investments
Current Fiscal Year
Fiscal Year to Date
Receipts
Beginning of
Outlays
Excess
This Year
Close ot
This Month
11.145
10.439
9,950
35.225
23.729
374.219
129.864
447.947
13.513
18.531
39.896
24.157
321.974
127.583
462.196
14.345
19.648
41,087
24.063
375.865
126.072
464,737
22.718
19.317
7
14,440
112.963
47.141
13.606
14.060
15.156
121.135
46.212
13.772
14.851
15,413
119.577
44.123
13.675
14.735
341,636
111.535
32,955
1,256,385
1,231,363
1,291,332
263.056
230.101
32.955
-50,377
400,284
211
561,458
211
-161.174
-50.377
400.073
561.246
-161.174
17.975
17.975
47.275
645,154
773,372
22.079
56.294
166.487
43.164
11.567
7.149
2,727
21.939
10.262
650
2.426
3.225
271
21.802
-317
19.778
60.542
149.646
33.480
10.955
7.130
4.007
14.241
13.865
590
2.419
- 1.347
24
5.870
317
2.301
-4.247
16.841
9.684
612
19
--1.280
7.698
-3.603
3,101
374,591
111.535
43,276
3.101
49
95,843
49
45.418
95,794
28
1.249
9,180
27.887
13.359
1.546
1.007
419
846
368
23
360
522
43
3.766
97
3.390
10.410
25.337
5.367
1.698
1.228
644
2.385
2.613
140
531
··493
1
1.188
-97
-2.141
-1.230
2.550
7.992
-152
-221
-225
-1.539
-2.245
-117
--171
61,292
14.914
58,190
14.914
46,378
45,467
44
4.974
JThis Month
1.879
295
27,672
60
Total trust lund receipts and outlaws
and investments held trom Table 6-
0
..........................................
Less: Interiund transactions
.0'''''",
Trust fund receipts and outlays on the basis
ot Tables 4 & 5
............ .....
0'
••
Total Federal fund receipts lind outlays
Less: Interfund transactions ........
Federal fund receipts and outlays on the
basis 01 1 able 4 & 5
Less: Offsetting proprietary recetpts ....
Net budget receipts & outlays
...............
2,784
2,784
89.011
136,286
No transactions
Note' Interfund receipts and outlays are transactions between Federal lunOs and lrust tunds
such as Federal paymenls and cantnbutlOns. and ,nteres! and prof,ls on tnvestments In Federal
,,",,u,,tles They have no net elleet on overall budget receipts and outlays s,nce the receipts .,de ot
such transactions IS offset against Ilugdet outlays In thiS table, Interlun(! rece'pts are sno",n as an
adjUstment to arrive at total receipts al>d outlays of Irus! tunds respectIVely
-128.218
Nole: DeI8Jls may not add 10 tOlals due to rounding.
Table g. Summary of Receipts by Source, and Outlays by Function of the U.S. Government March 1996
and Other Periods
'
l$
Classification
millions]
This Month
Fiscal Year
To Date
Comparable Period
Prior Fiscal Year
22,523
15,460
293,584
64,205
274,680
56,650
41,086
258
419
4,133
1,137
1,528
2,467
220,430
8,261
2,294
27,159
7,405
9,284
12,532
214,061
8,571
2,275
27,680
6,653
9,865
13,949
89,011
645,154
614,383
22,479
1,391
1,381
131
1,592
-62
-1,443
2,864
1,007
4,270
10,306
14.123
25.968
29.116
3,300
1,342
766
20,244
-2,490
129,377
8,205
B,418
975
12,070
4,726
-8,058
18,446
5,353
25,549
56,926
83,841
119,362
171,110
17,675
8.143
7,086
120,337
-16,169
136,665
10,446
8,514
2,577
12,381
10,279
-11,783
19,008
5,067
26,919
56,385
77,005
112,373
163,715
18,953
7,949
7,397
113,453
-16,270
136,286
773,372
761,033
RECEIPTS
Individual income taxes .... " .......... " .. .
Corporation Income taxes
Social insurance taxes and contributions:
Employment taxes and contributions
Unemployment Insurance ...... .
Other retirement contributions ..
Excise taxes
Estate and gift taxes
Customs
............ .
Miscellaneous
Tolal ..
NET OUTLAYS
National defense
International affairS
General science, space, and technology ..
Energy
.......... " ..
Natural resources and environment
Agriculture
Commerce and housing credit
Transportation
Community and Regional Development
Education, training, employment and social services
Health
Medicare
Income security
Social Security
Veterans benefits and services
Administration of justice
General government ..
Interest ..
Undistributed offsetting receipts
Total ", .. ,."",., .. , .. ,.".',.", .......... " .. ".,., ... ,."
Nole: Details may not add to tOlals due to rounding.
29
Explanatory Notes
the employee and credits for whatever purpose the money was Withheld.
Outlays are stated net of offsettmg collections (Including receipts of
revolving and management funds) and 01 refunds. Interest on the public
debt (public issues) is recognized on the accrual basis. Federal credit
programs subject to the Federal Credit Reform Act of 1990 use the cash
basis of accounting and are divided into two components. The portion of
the credit activities that involve a cost to the Government (mainly
subsidies) is included within the budget program accounts. The remaining
portion of the credit activities are in non-budget financing accounts
Outlays of off-budget Federal entities are excluded by law from budget
totals. However, they are shown separately and combined With the onbudget outlays to display total Federal outlays.
1. Flow of Data Into Monthly Treasury Statement
The Monthly Treasury Statement (MTS) IS assembled from data in the
central accounting system. The major sources of data Include monthly
accounting reports by Federal entities and disburSing officers, and daily
reports from the Federal Reserve banks. These reports detail accounting
transactions affecting receipts and outlays of the Federal Government
and Off-budget Federal entities, and their related effect on the assets and
liabilities of the US Government. Information IS presented In the MTS on
a modified cash basIs.
2. Notes on Receipts
Receipts included In the report are classified into the follOWing major
categories: (1) budget receipts and (2) offsetting collections (also called
applicable receipts). Budget receipts are collections from the public that
result from the exercise of the Government's sovereign or governmental
powers, excluding receipts offset against outlays. These collections, also
called governmental receipts. consist mainly of tax receipts (including
social insurance taxes), receipts from court fines, certain licenses, and
depoSits of earnings by the Federal Reserve System. Refunds of receipts
are treated as deductions from gross receipts.
Offsetting collections are from other Government accounts or the
public that are of a business-type or market-oriented nature. They are
classified into two major categories: (1) offsetting collections credited to
appropriations or fund accounts, and (2) offsetting receipts (I.e., amounts
deposited in receipt accounts). Collections credited to appropriation or
fund accounts normally can be used without appropriation action by
Congress. These occur in two instances: (1) when authorized by law,
amounts collected for materials or services are treated as reimbursements to appropriations and (2) In the three types of revolving funds
(public enterprise, intragovernmental, and trust): collections are netted
against spending, and outlays are reported as the net amount.
Offsetting receipts in receipt accounts cannot be used without being
appropriated. They are subdivided Into two categories: (1) proprietary
receipts-these collections are from the public and they are offset against
outlays by agency and by function, and (2) Intragovernmental fundsthese are payments into receipt accounts from Governmental appropriation or funds accounts. They finance operations within and between
Government agencies and are credited with collections from other
Government accounts. The transactions may be intrabudgetary when the
payment and receipt both occur within the budget or from receipts from
off-budget Federal entities in those cases where payment is made by a
Federal entity whose budget authority and outlays are excluded from the
budget totalS.
Intrabudgetary transactions are subdivided into three categories:
(1) interfund transactions. where the payments are from one fund group
(either Federal funds or trust funds) to a receipt account in the other fund
group; (2) Federal intrafund transactions, where the payments and
receipts both occur within the Federal fund group; and (3) trust intrafund
transactions. where the payments and receipts both occur within the trust
fund group
Offsetting receipts are generally deducted from budget authonty and
outlays by function, by subfunction, or by agency. There are four types of
receipts. however, that are deducted trom budget totals as undistributed
offsetting receipts. They are: (1) agencies payments (including payments
by off-budget Federal entities) as employers into employees retirement
funds, (2) interest received by trust funds. (3) rents and royalties on the
Outer Continental Shelf lands, and (4) other interest (i.e., Interest collected
on Outer Continental Shelf money in aeposit funds when such money is
transferred into the budget)
4. Processing
The data on payments and collections are reported by account symbol
into the central accountil'\g system. In turn, the data are extracled from
this system for use in the preparation of the MTS
There are two major checks which are conducted to assure the
consistency of the data reported:
1. Venflcation of payment data The monthly payment activity reported by
Federal entities on their Statements of Transactions IS compared to the
payment activity of Federal entities as reportecl by disbursing officers.
2. Verification of collection data. Reported collections appearing on
Statements of Transactions are compared to depOSits as reported by
Federal Reserve banks.
5, Other Sources of Information About Federal Government
Financial Activities
• A Glossary of Terms Used in the Federal Budget Process, January
1993 (Available from the U.S. General Accounting Office, P.O. Box 6015,
Gaithersburg. Md. 20677). This glossary provides a basic reference
document of standardized definitions of terms used by the Federal
Government in the budgetmaking process.
• Daily Treasury Statement (Available from GPO, Washington, D.C
20402, on a subscription basis only). The Daily Treasury Statement i~
published each working day of the Federal Government and provides dati
on the casn and debt operations of the Treasury.
• Monthly Statement of the Public Debt of the United State
(Available from GPO, Washington, D.C. 20402 on a subscription basi
only). This publication provides detailed information concerning the publi
debt
• Treasury Bulletin (Available from GPO, WaShington, D.C. 20402, b
subscription or single copy). Quarterly. Contains a mix of narrative, table~
and charts on Treasury issues, Federal financial operations, inlernationi
statistics. and special reports.
• Budget of the United States Government, Fiscal Year 19 _
(Available from GPO, Washington, D.C. 20402). This publication is
single volume which provides budget infonmation and contains:
-Appendix, The Budget of the United States Government, FY 19 _
-The United States Budget in Brief. FY 19 _
-Special Analyses
-Historical Tables
-Management of the United States Government
-Major Policy Initiatives
3. Notes on Outlays
Outlays are generally accounted for on the baSIS of checks ISSUed,
electroniC funds transferred, or cash payments made. Certain outlays do
not require Issuance of cash or checks An example IS charges made
against appropriations for that part of employees salaries withheld for
taxes or savings bond allotments - these are counted as payments to
• United States Government Annual Report and Appendix (Avallal
from Financial Management Service. U.S. Department of the Treasu
Washington, D.C. 20227). This annual report represents budget,
results at the summary level. The appendix presents the individual rece
and appropriation accounts at the detail level.
30
SCheduled ~
The release date for the April 1996 Statement
will be 2:00 pm EST May 21, 1996.
For sale by the Superintendent of Documents, U.S. Government Printing
Office. Washington. D.C. 20402 (202) 512-1800. The subscription price is
$35.00 per year (domestic). $43.75 per year (foreign).
No single copies are sold.
The Monthly Treasury Statement is now available on the Department of Commerce's Economic Bulletin Board.
For information call (202)482-1986.
NEWS
TREASURY
OFFICE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C.• 20220 _ (202) 622.2960
FOR RELEASE AT 2:30 P.M.
April 19, 1996
CONTACT:
Office of Financing
202/219-3350
TREASURY'S 52-WEEK BILL OFFERING
The Treasury will auction approximately $19,250 million
of 52-week Treasury bills to be issued May 2, 1996. This
offering will provide about $1,300 million of new cash for the
Treasury, as the maturing 52-week bill is currently outstanding
in the amount of $17,953 million. In addition to the maturing
52-week bills, there are $26,901 million of maturing 13-week and
26-week bills.
Federal Reserve Banks hold $11,395 million of bills for
their own accounts in the maturing issues. These may be refunded
at the weighted average discount rate of accepted competitive
tenders.
Federal Reserve Banks hold $6,501 million of the maturing
issues as agents for foreign and international monetary authorities. These may be refunded within the offering amount at the
weighted average discount rate of accepted competitive tenders.
Additional amounts may be issued for such accounts if the
aggregate amount of new bids exceeds the aggregate amount of
maturing bills. For purposes of determining such additional
amounts, foreign and international monetary authorities are
considered to hold $567 million of the maturing 52-week ~ssue.
Tenders for the bills will be received at Federal
Reserve Banks and Branches and at the Bureau of the Public
Debt, Washington, D.C. This offering of Treasury securities
is governed by the terms and conditions set forth in the Uniform
Offering Circular (31 CFR Part 356) for the sale and issue by
the Treasury to the public of marketable Treasury bills, notes,
and bonds.
Details about the new security are given in the attached
offering highlights.
000
Attachment
RR-1017
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HIGHLIGHTS OF TREASURY OFFERING OF 52-WEEK BILLS
TO BE ISSUED MAY 2, 1996
April 19, 1996
$19,250 million
Offering Amount . . . . .
Description of Offering:
Term and type of security
CUSIP number
Auction date
Issue date
Maturity date
Original issue date
Maturing amount . . .
Minimum bid amount
Multiples . . . . .
364-day bill
912794 2P 8
April 25, 1996
May 2, 1996
May 1, 1997
May 2, 1996
$17,953 million
$10,000
$1,000
Submission of Bids:
Noncompetitive bids
Competitive bids
( 1)
(2 )
(3 )
Accepted in full up to $1,000,000
at the average discount rate of
accepted competitive bids
Must be expressed as a discount rate
with two decimals, e.g., 7.10%
Net long position for each bidder
must be reported when the sum of the
total bid amount, at all discount
rates, and the net long position are
$2 billion or greater.
Net long position must be determined
as of one half-hour prior to the
closing time for receipt of
competitive tenders.
Maximum Recognized Bid
at a Single Yield
35% of public offering
Maximum Award . . .
35% of public offering
Receipt of Tenders:
Noncompetitive tenders
Competitive tenders
Payment Terms . . . . . . .
Prior to 12:00 noon_Eastern Daylight
Saving time on auction day
Prior to 1:00 p.m. Eastern Daylight
Saving time on auction day
Full payment with tender or by charge
to a funds account at a Federal
Reserve bank on issue date
NEWS
TREASURY
OFFICE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTOr\, D.C .• 20220. (202) 622-2960
EMBARGO TO BE SET AT BRIEFING
Remarks as prepared for delivery
April 21, 1996
REMARKS OF TREASURY SECRETARY ROBERT E. RUBIN
CHAIRMAN, G-7 APRIL CONFERENCE
Today's discussions touched on issues that are profoundly in the short- and longrun interests of the global economy, and of the United States. We talked about
encouraging growth in the industrial nations. And we discussed strengthening the
international financial institutions and global market mechanisms -- making them as
modern as the markets in which they operate. These are steps that not only will
encourage growth and development in developing and transitional economies, but also
prevent and deal with crises in the global financial markets_
We assessed our economic outlooks and reviewed what policy paths appeared
most promising. In the broad sense, we believe that despite the recent pause in some
countries, the G-Ts underlying fundamentals are promising, particularly in light of
progress reducing inflation, but they require that policies continue to be directed at
sustaining non-inflationary growth and, where necessary and appropriate, at strengthening
recovery.
We touched on the conclusions of the Lille employment conference and
welcomed, in particular, the call for continued reduction in structural obstacles to
employment growth, through policies aiming at ensuring well-functioning markets -including labor markets -- as well making economies more responsive to change, and
providing improved educational and training opportunities.
The ministers and governors welcomed developments in the exchange markets
since our last meeting and, more broadly, since a year ago. We also reaffirmed our
standing commitment to reduce imbalances and cooperate closely in the exchange
markets. We also took satisfaction from the ongoing adjustment in external imbalances,
and underlying conditions should favor further adjustment.
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2
Looking to the Lyon Summit, we reviewed progress so far and the work under
way to implement the Halifax Summit initiatives that President Clinton set in motion in
Naples. These initiatives are extremely important so that our international financial
institutions can deal effectively with the challenges in the greatly changed global financial
system and the global economy. These changes deal with the operations and direction of
the IFls and represent a hard-headed, realistic and practical approach to global
challenges. These changes will not occur overnight, but they are very real and very
significant, in fact, far more significant for our long run economic and national security
interests than the great preponderance of the issues that dominate the day to day news.
We're looking forward to proposals for enhanced cooperation by the Basle
Committee on Banking Supervision and the IOSCO Technical Committee. And we
welcomed the report of the Task Force on the Multilateral Development Banks and the
agreement on an International Development Association replenishment.
We also covered the proposals for dealing with the multilateral debt of the most
heavily indebted countries. Following other discussions this week, we expect the IMF
and World Bank, in cooperation with the regional development banks, to offer more
specific proposals, which the G-7 believes should involve the fullest use of their own
resources to finance debt reduction. The ministers and governors agreed to ask our
respective heads of state to provide further impetus and guidance in Lyon to move these
proposals forward as rapidly as possible after that.
We welcomed the new financial disclosure program that will be adopted at the
IMF Interim Committee meeting Monday, and we continue to move forward the work on
developing an enhanced financing mechanism. There was also brief discussion of
progress towards proposals on sovereign liquidity crises, with important recommendations
to reduce the expectation of official finance, and encourage private investors to pay more
attention to risk.
'Ve met with our Russian counterparts, reviewed their economic situation and
welcomed Russia's 1996 economic program. Russia's economic performance last year
\vas favorable, and they have sustained that progress this year. We encouraged the
Russian authorities to continue with the full implementation of their reform program
which, if vigorously implemented, will help Russia build free markets and reap the real
benefits of reform. We also took note of this week's Paris Club meeting on actions to
address Russia's medium term debt problems.
Lastly, we discussed the success of the Brussels Conference and urged donors to
coordinate reconstruction efforts closely \\"ith the \Vorld Bank and to expedite their
implementation.
3
It was an extremely full agenda, and I believe the decisions taken today and the
steps that will follow will contribute to growth in the industrial nations, as well as the
developing and transition economies, and strengthen our international financial
institutions and the markets and market mechanisms. And all of that is very much in the
interests of the United States.
Questions?
DEPARTMENT
OF THE
TREASURY ~+~.'j
t~'\</
TREASURY
NEW S
~~8~9~. . . . . . . . . . . . . . . . . . . .. .
........................
omCE OF PUBUCAFFAIRS -1500 PENNSYLVANlAAVENUE, N.w. - WASHINGTON, D.C. - 20220 - (202) 622-2960
TRANSCRIPT OF POST G-7 PRESS BRIEFING
WITH TREASURY SECRETARY ROBERT E. RUBIN
APRIL 21, 1996
D
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press rei
eases,
s eech es,
PU bl/'c schedules and off/cial
biooraphies,
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'))'
b'
622-2040
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NEWS
TREASURY
OFFICE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C .• 20220 • (202) 622-2960
FOR IMMEDIATE RELEASE
April 22, 1996
STATEMENT OF TREASURY SECRETARY ROBERT E. RUBIN
IMF INTERIM COMMITTEE
WASHINGTON, D.C.
Our meeting today provides an opportunity to take stock and add impetus to
our efforts to promote a growing world economy in which all countries benefit and to
advance those reforms that are important to meeting the challenges of a global
financial marketplace.
Our goals for these meetings should be:
o
to review policies that will help to sustain and broaden the current economic
expansion;
o
to make progress on our agenda to strengthen the IMF's capacity to deal with
the new challenges of the global economy and global financial markets; and
to move forward in working out ways for the IMF and World Bank to address
o
more effectively the problems of unmanageable levels of debt of some of the poorest
countries.
Sustaining economic expansion
Since our October meeting, a number of positive developments have
strengthened underlying conditions and improved the outlook for non-inflationary
growth. In many countries there is now more confidence that the period ahead will
feature sustained growth. At the same time, growth has slowed in some countries,
notably in Europe.
RR-I019
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In the United States, there are signs of strength in the recent data on job
creation and consumer spending, suggesting that the special factors which restrained
growth earlier this year are waning. At the same time, U.S. inflation performance
has been very favorable. Our current account deficit should decline further if growth
in our major trading partners is as good as expected.
On the fiscal side, we are continuing to make progress toward balancing the
budget by 2001 or 2002. Following the largest three-year decline of the deficit ever
experienced, it is now at its lowest level in 16 years as a share of the economy. We
continue to be hopeful that agreement can be reached on a multi-year balanced
budget plan and are committed to pressing on toward that end.
Prospects in Japan have improved since we last met. Stimulative
macroeconomic policies have contributed significantly to the improved outlook. The
current account surplus has declined significantly, with additional adjustment still in
the pipeline. But risks remain, and an early tightening of policy could undermine the
recovery. It is important that the authorities continue to direct monetary and fiscal
policies to ensuring strong and durable domestic demand-led growth.
In Europe, hopes for a resumption of growth have not yet been realized.
Further, the current slowdown occurred after a relatively brief recovery from the
previous recession, leaving unemployment too high. On the positive side, important
progress is being made in many countries on fiscal consolidation. Also, inflation is
low and declining, suggesting that policies aimed at bolstering expansion would not
pose a significant inflationary risk.
We can all take satisfaction from exchange market developments over the past
year.
Most of the economies in transition are now experiencing stronger growth or
smaller output shortfalls, and additional progress has been made toward reducing
inflation and strengthening market institutions and forces. The best results have been
achieved in those countries which began at an early stage to introduce
macroeconomic stabilization and structural reform programs and which have
persevered the longest with these efforts.
Prospects for the developing countries are encouraging overall, with another
year of favorable aggregate growth in prospect and inflation coming down. I am
especially encouraged by the success that Mexico has had in getting back on track
over the past year, and Argentina has coped well \\1tb a difficult period, too.
Continued strong growth is once again in prospect for Asia, with inflation risks
somewhat moderated. More ambitious stabilization efforts are being made by some
in Africa
Despite these promising developments, we cannot be satisfied until all
countries are experiencing sustained growth and rising living standards. We recognize
only too well that too many countries have not reached this goal.
3
Strengthening the International Financial System
Over the past year, we have been working together to strengthen the tools we
have .to deal with threats to the stability of the international financial system.
Conslderable progress has been achieved in many areas.
Improved Disclosure
We believe that improved disclosure will help financial markets perform better
in fulfilling the important function of channeling investment to where it can earn the
highest return. Improved disclosure can also help expose possible risks in the
underlying financial conditions and policies of countries -- and that in turn can help
us better anticipate and thereby avert financial crises. I believe that the new IMF
standard on the provision of data to the public is a truly important step forward. We
recognize that full compliance with the more rigorous standard will require a change
in practices for many countries and that some costs may be involved. Indeed, I have
instructed that some changes be made at the Treasury Department, and we intend to
subscribe at the outset. But it is a step that countries should take in their own
interest. We hope that all countries which wish to tap the international financial
markets will subscribe to the standard at an early date.
Strengthening Financial Market Oversight
International financial markets need to be strengthened by additional steps to
improve prudential supervision and regulation and to increase international
cooperation among supervisors and regulators. In this regard. we are encouraged by
the substantial efforts underway in the Basle Committee on Banking Supervision and
IOSeO to improve cooperation in a number of important areas that can help reduce
risk in the system.
One critical area warranting further attention is financial market supervision in
emerging markets. This is important not just to promote the basis for continued
liberalization of the capital markets, but also because weak banking sectors can
constrain the ability of policy makers to maintain macroeconomic stability.
As emerging markets grow in relative importance in the global economy,
sound regulation will be all the more important to minimize the incidence and the
impact of financial disruptions originating in these markets. It is crucial that national
financial authorities raise their commitment to a market-oriented financial system and
sound supervisory policies, and take steps to strengthen supervisory practices and
capabilities.
4
The IMP can contribute to this process by promoting the development of a
sound policy framework in the financial sector consistent with the maintenance of
macroeconomic stability and by enhancing surveillance of banking sector soundness in
the context of Article IV consultations. The IMF and the World Bank should
continue to examine bow they can contribute to strengthening banking sector
supervision in emerging economies.
Dealing more effectively with financial crises
Even the best surveillance and complete market transparency, however, cannot
prevent all crises. Experience has taught that such crises may have spillover effects
and broader consequences. The IMF serves as our institutional fire fighter,
encouraging practices that minimize the risk of eruption of a problem but acting
swiftly if one occurs to help contain it and ultimately to deal with it.
The IMF has improved its response mechanism by putting in place expedited
procedures to deal with emergencies.
I welcome the progress made toward the creation of new arrangements that
could double the supplementary resources currently available under the General
Arrangements to Borrow. This is an important initiative to ensure that the IMF will
be able to discharge its responsibility to safeguard the international financial system.
And it is a strong signal of increased international cooperation among a group of
countries that share an interest in supporting the stability of the system.
It is important to recognize that the new arrangements would be reserved for
exceptional situations to supplement the IMF's resources as needed, particularly for
upper credit tranche programs entailing strong conditionality. Participation in the
new arrangements would be based on the fundamental principle of equal rights and
responsibilities, and would include appropriate activation procedures and equitable
burden sharing.
\Ve look forward to a further meeting of the potential participants in the new
arrangements and hope that agreement can be reached on an appropriate
institutional structure in the near future.
We recognize that the expansion of resources to deal with emergencies is not
a substitute for ensuring that the IMF has adequate resources to fulfill its regular
function to support members' stabilization and reform efforts. The IMF is and
should remain a quota-based institution. The 11th general review of quotas is
proceeding on schedule and warrants the support of all IMF members. We are
fortunate that the IMP's financial position is presently strong. It is important that it
remain so. There are a number of important issues involved which require further
work, including the question of bringing actual quotas more into line with members'
calculated quotas.
5
The resolution of financial crises requires a cooperative approach involving
sovereign debtors, the official community -- comprising official bilateral lenders and
the multilateral institutions -- and private creditors. Financing is now provided by a
much larger and more diverse pool of largely anonymous investors. However, the
basic principle of shared responsibility remains valid.
In this regard, I very much welcome the report to G-lO Ministers and
Governors on the Resolution of Sovereign Liquidity Crises, which will be released to
the public. The report provides a cogent analysis of the implications, in the changed
international financial market environment, of an actual or prospective suspension of
payments on external debt to private creditors. It identifies ways to improve existing
practices and procedures for dealing with payments suspensions in an evolutionary
manner. It contains some recommendations for specific actions by the official and
private sectors, including one directed at the IMF -- to consider extending the scope
of IMF policy regarding support for countries that are facing the prospect of
continuing to accumulate arrears to private sector creditors -- which we urge this
Committee to endorse. Its recommendations reflect a realistic assessment of how
markets work and are pragmatic. Follow-up on the report will be an important step.
At the same time, it is unlikely that the final word has been written. We should
remain open to further adaption of accepted practices and procedures.
Meeting the needs of poorer countries
Several years ago, the global community recognized that many of the poorer
developing countries had accumulated external debts over the past two to three
decades which would prove impossible for them to fully service. To improve their
capacity to develop and grow, we have agreed as a community to reduce their debts
to governments by as much as 67 percent -- provided they maintain their reform
efforts. The intent is to clear out the old, and help put these countries back on their
feet -- for their benefit and the benefit of the global community as a whole. The
Paris Club has already provided deep relief under this approach for several countries,
and for two has undertaken final reduction of the stock of debt.
For some of these countries, however, even this deep bilateral debt reduction
will not assure a manageable debt profile. For them, additional action will be
necessary -- including measures to ease the burden of debt to international financial
institutions. The United States believes that timely action to put these countries back
on a manageable path is needed to assure that new funding is truly productive -- not
just servicing old debts.
Managing Director Camdessus and President Wolfensohn have produced
preliminary proposals for addressing these problems. We appreciate and welcome
the work which they and their staffs have undertaken during the past several months
in analyzing the debt problems of the poorest countries and considering possible
mechanisms for easing their debt burdens. As a result of these efforts, we now have
common agreement that:
6
(1)
There are a number of poorest countries for which action on
multilateral debt is needed;
(2)
We should aim to achieve sustainable debt burdens for these countries,
in conjunction with continued strong reform efforts; and
(3)
The multilateral institutions will need to use their own resources for
this purpose, without beavy reliance on bilateral contributions.
We particularly welcome the concepts which World Bank and IMP
management and staffs have advanced for action by the multilateral institutions to
ease multilateral debt burdens for these countries: the concept of an IDAadministered trust fund; the possible use of IDA grants to restrict the further growth
of IDA debt; and, within the IMF, preliminary ideas suggesting the possibility of
more concessional terms on ESAF loans. These concepts need to be further
developed, with specific proposals for implementation. We would urge the
institutions, in advancing these proposals, to assure that the time frame for
multilateral action is both reasonable and flexible, and that mechanisms are
developed for coordination among the multilateral institutions and with the Paris
Club. We share the concern of other governments that further action by the Paris
Club not be a prerequisite for multilateral action. The creditor community should
move forward together in this effort.
We would hope that specific proposals for action by all of the multilateral
institutions can be advanced in the coming weeks, so that final decisions can be made
at the latest by the fall IMF and World Bank meetings.
As noted above, the ongoing discussion of the future of the Enhanced Structural
Adjustment Facility (ESAF) is very relevant to the effort underway in the institutions to
deal with the multilateral debt problems of the poorest.
The pursuit of sound policies is a necessary foundation for sustained growth and
development. The ESAF is the principal vehicle by which the Fund supports the
stabilization and structural reform efforts of its poorest members. The ESAF merits our
continued support. At the same time, the rapidly growing countries in Asia and the
recent improved economic performance in some African countries demonstrate that
poverty need not be a permanent condition. Hence, we should be looking to the day
when the ESAF is no longer needed as a growing number of these countries pursue the
policies that will enable them to access other sources of financing.
7
There is a broad consensus on continuing the ESAF and placing it on a selfsustaining basis. However, we confront the difficult task of mobilizing sufficient
resources to finance ESAF operations during an interim 5-year period before the facility
can function fully on its own. It is essential that meaningful support be provided to the
ESAF, but in a realistic manner. At a time of serious budget constraints in many
countries, including my own, this responsibility will inevitably have to fall primarily to
the IMF, in particular through more efficient use of resources already available to the
IMF. We are prepared to consider carefully the proposal to invest the profits on a
modest portion of the IMF's gold assets to generate additional income for use by the
ESAF without weakening the institution's financial base.
The Managing Director has proposed an approach that would permit the ESAF to
continue lending at a high level for an indefmite period. This proposal deserves our full
consideration. But we would caution against a plan the viability of which depends on
sizeable bilateral contributions.
We should be prepared to examine alternative approaches that utilize the various
building blocks of a possible solution in different ways to achieve a satisfactory outcome.
This could involve -- altering the reliance on investment income relative to bilateral
contributions for the interest subsidy; utilizing the resources in the ESAF reserve for loan
principal rather than new borrowing or quota resources; and sustaining the level of
lending by introducing a "sunset" provision which recognizes explicitly that our goal is an
ESAF that works itself out of a job by promoting successful adjustment and reform.
Each of these building blocks should be considered -- individually or in combination -- as
we aim for a solution that offers the best prospect of achieving a consensus and that can
win the necessary public support at home.
The IMF's contribution to resolving the debt problems of a number of the poorest
countries in the world could be implemented through a modified ESAF that was fmanced
at a level sufficient for the IMF to playa role in this initiative.
Conclusion
The period since the previous meeting of this Committee has been one of
extraordinary, almost unprecedented activity on issues bearing on the management and
adaption of the international monetary system, which is the Committee's primary sphere
of responsibility. Some of this work has come to or is nearing fruition, at least
conceptually, while other issues, like the name of this Committee, are at varying
"interim" stages.
It is our strong hope and belief that the next half year can be equally productive
and that our next meeting will be able to bear witness to further substantial progress on
most if not all of the issues that remain under discussion.
-30-
UBLIC DEBT NEWS
Department of the Treasury • Bu reau of the Public Debt • Washington, DC 20239
FOR IMMEDIATE RELEASE
April 22, 1996
CONTACT: Office of Financing
202-219-3350
RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
Tenders for $11,513 million of 13-week bills to be issued
April 25, 1996 and to mature July 25, 1996 were
accepted today (CUSIP: 912794Z64).
RANGE OF ACCEPTED
COMPETITIVE BIDS:
Low
High
Average
Discount
Rate
4.96%
4.97%
4.97%
Investment
Rate
5.09%
5.10%
5.10%
Price
98.746
98.744
98.744
Tenders at the high discount rate were allotted 91%.
The investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED
TOTALS
Type
Competitive
Noncompetitive
Subtotal, Public
Federal Reserve
Foreign Official
Institutions
TOTALS
RR-lOZO
AND
ACCEPTED (in thousands)
Received
$53,513,473
Accented
$11,512,520
$48,146,850
1,282,623
$49,429,473
$6,145,897
1,282,623
$7,428,520
3,732,500
3,732,500
351,500
$53,513,473
351,500
$11,512,520
UBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
FOR IMMEDIATE RELEASE
April 22, 1996
CONTACT: Office of Financing
202-219-3350
RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
Tenders for $11,729 million of 26-week bills to be issued
April 25, 1996 and to mature October 24, 1996 were
accepted today (CUSIP: 9127943L6).
RANGE OF ACCEPTED
COMPETITIVE BIDS:
Low
High
Average
Discount
Rate
5.01%
5.C3%5.02%
Investment
Rate
5.21%
5.23%
5.22%
Price
97.467
97.457
97.462
Tenders at the high discount rate were allotted 9%.
The investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED
TOTALS
Type
Competitive
Noncompetitive
Subtotal, Public
Federal Reserve
Foreign Official
Institutions
TOTALS
RR-I021
AND
ACCEPTED ( in thousands)
Received
$50,898,973
Acce.Qted
$11,728,879
$44,484,270
1,021,403
$45,505,673
$5,314,176
1,021,403
$6,335,579
3,200,000
3,200,000
2,193,300
$50,898,973
2,193,300
$11,728,879
D EPA R T MEN T
0 F
THE 'T REA SUR Y
NEWS
~/78~9~. . . . . . . . . . . . . . . . . . . . . . . . . ..
............................
OFFICE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W .• WASHINGTON, D.C .• 20220. (202) 622-2960
TESTIMONY OF GEORGE MUNOZ
ASSISTANT SECRETARY OF THE TREASURY
FOR MANAGEMENTI CHIEF FINANCIAL OFFICER
HOUSE SUBCOMMITTEE ON GOVERNMENT MANAGEMENT, INFORMATION
AND TECHNOLOGY
APRIL 23, 1996
RR-1022
For press relea~es, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
Federal Budget
and
Financial Management Reform
Testimony
by
George Munoz
Assistant Secretary for Management
& Chief Financial Officer
Department of the Treasury
Before the
Committee on Government Reform
and Oversight
Subcommittee on Government
Management, Information and Technology
U.S. House of Representatives
April 23, 1996
INTRODUCTION
Representative Hom, distinguished members of the Committee, ladies and gentlemen. On behalf
of Secretary Robert Rubin and the Department of the Treasury, I want to thank you for the
opportunity to come before you today to discuss the Federal budget process and fmancial
management reform. The best way we can serve the American people is by assuring them that
the dollars they send to Washington, D.C. are being used responsibly, being spent with private
sector style control and accountability. That idea is central to President Clinton, Vice President
Gore and their related efforts to reinvent government. Central as well, is legislation like the
CFO Act.
CFO ACT IS WORKING
First and foremost, the Chief Financial Officers Act is working. Because of the CFO Act, we
are better off today than we were just five years ago when it comes to fmancial management
reform. Let me list some of these successes Governmentwide and at the Treasury Department.
CFO Council Plays a Major Role. One of the most important actions of the CFOs, was the
utilization of the CFO Council as a vehicle for improving financial management throughout the
Federal Government. Over the past few years, the CFO Council's growing influence and
leadership have positively affected key aspects of financial management across the Government.
The CFO Council is comprised of the CFOs and Deputy CFOs from each of the 24 largest
Federal Agencies. The CFO Council has been very active in helping to implement the CFO Act,
and related statutes, as well as, the recommendations of the National Performance Review for
"Improving Financial Management". I will highlight a few examples of this work, and would
like to submit for the record a full listing of CFO Council activities, with respect to the National
Performance Review financial management recommendations.
One of the more notable areas of improvement is with the preparation and audit of
entities' financial statements. In 1990, there were three entities with audited financial
statements -- only one of which obtained a clean audit opinion. Through the passage of the CFO
Act and the support of the CFO Council, there has been significant growth in audited financial
statements. As of July 1995, 100 entities have prepared audited financial statements of which 59
received clean audit opinions.
Guidelines on GPRA Implementation. The CFO Council issued guidance entitled
"Implementation of the Government Performance and Results Act (GPRA)".
As we approach
1997 when GPRA takes full effect, the CFO Council will continue its efforts to further
integrate performance measures into the budget process and to assist all agencies in
implementation, through the development of best practices, case studies, and outreach
seminars.
Consolidating Multiple Reports into a Single Accountability Report. Under the authority of
the Government Management Reform Act, the CFO Council has taken a leadership role in
helping to define how the government should proceed with streamlining its financial
management reporting process. Several Agencies have produced a single accountability report
that combines core financial management reporting -- audited financial statements, Federal
Managers' Financial Integrity Act, Prompt Payment Act, and Civil Monetary Penalties.
Working with OMB, the CFO Council is assessing the pilot reports and will be recommending
further actions.
Based on this short, but illustrative, list of actions taken by the Governmentwide CFO Council, I
would hope that this Committee would view the CFO Council as a source of information and
advice on the further development of financial management reform, legislation and ideas.
Treasury Advancements. The Department of the Treasury has also taken many actions to
implement the CFO Act and financial management reform. It has established its own CFO
Council in which all Treasury bureaus participate. Through this Treasury Council, we have:
-2-
One, We Have Reduced Core Accounting Systems from 9 to 5. Over the past five years,
Treasury has reduced the number of core financial management systems within the Department
from nine to five. Our goal is to further reduce to two systems, one for manufacturing and one
for non-manufacturing by 1998. In addition, Treasury is developing a Departmental database
containing current and historical infonnation supplied by our bureaus. The Treasury
Information Executive Repository (TIER), is designed to function as a warehouse where
fmancial data will be collected through a Standard General Ledger (SGL) trial balance or by
other data elements for every Treasury Fund Symbol maintained by the bureaus. Once the
fmancial data is collected, we will be able to produce financial reports that will enable us to
perform system-designed integrity checks, trend analysis, consolidations, comparisons, and
projections for financial management decision making purposes;
Two, We Have Achieved Substantial Growth in Audit Coverage. The preparation and
subsequent audit of entities fmancial statements has also grown over the last few years. For
fiscal year 1994, approximately $1.316 trillion, or 81 percent of Treasury's total collections and
expenditures, was audited. Audits performed include the Internal Revenue Service and the
u.s.
Customs Service. In fiscal year 1995, this list will grow to 82 percent by the inclusion of the
Bureau of Alcohol, Tobacco and Firearms with an increase of $13.5 billion in revenue being
audited. By the end of fiscal year 1996, it is planned that 100 percent of Treasury bureaus will
have audited fmancial statements performed~
Three, We Have Integrated Perfonnance Measures in the Budget. The Department of the
Treasury has taken an aggressive posture in implementing GPRA. Under the direction of
Secretary Rubin and the CFO's office, all Treasury bureaus are now required to submit
Strategic Plans and fInancial statements containing performance information. This information
will be incorporated into a comprehensive Departmental budget submission for fiscal year
1998. Further, the development of cost accounting systems has been identified as a priority
for the Department, which will augment our ability to develop performance measurement
-3-
information. The efforts of the CFO Council and our own internal efforts at Treasury, should
position us well to meet all the requirements envisioned when GPRA takes full effect in 1997;
Four, Established the Framework for Financial Statements. The Department of the
Treasury has been a major participant in the activities of the Federal Accounting Standards
Advisory Board (the Board). The Board will soon finish the formidable task of completing the
basic set of Federal accounting standards, as it was urged to do by the National Performance
Review. These standards are approved by the Secretary of the Treasury, the Comptroller
General, and the Director of the Office of Management and Budget, and then issued by OMB.
We at Treasury are proud to have been a major player in this important effort; and,
Five, Prepared for Governmentwide Financial Statement. Treasury is working diligently
with the Office of Management and Budget and the General Accounting Office to meet the
mandate for a fiscal year 1997 consolidated govemmentwide financial statement. A task force
made up of agency CFOs and IGs is also providing valuable advice to ensure that all necessary
financial information 'is available for the Govemmentwide audited financial statement.
RECOMMENDATIONS
I do have some recommendations for the consideration by your Committee.
Important That All Agency CFOs Have Full Fiscal Responsibility Including Budget.
Under the CFO Act, agencies do have some latitude in implementing an organizational structure
for various functions. In particular, the budget formulation process is not identified as a
mandatory duty of the agency CFO. At Treasury, I have the necessary leverage to ensure that
fiscal matters are carried out with consistency. I have this necessary leverage by having the full
support of Secretary Rubin. Further, I have both budget formulation and execution, as well as,
- 4-
all fmancial accounting and reporting under my span of control. Some CFOs at other agencies
do not have this.
It is my personal opinion that for a CFO to be truly effective in carrying out the fiscal duties and
responsibilities of an agency, both budget formulation and execution, as well as GPRA, must be
under his or her span of control. My opinion is also supported by the Government-wide Chief
Financial Officers Council. The CFO Council has made known its position through the approval
and issuance of its "Guidance for CFO Organizations Required by the Chief Financial Officers
Act."
Empower CFO with Flexibility in Audit Cycle. From either a Governmentwide or
Departmentwide perspective, it may not always be cost effective to have full financial statement
audits performed for all entities or accounts. Consideration should be given to the financial
management discipline displayed by the entity which can be documented by previously issued
audited financial statements. Once an entity can demonstrate they maintain sufficient
management control structures, adequate financial management systems and reporting, and have
received unqualified audit opinions for several years, you need to question the benefit of
continuing a yearly audit.
For example, at Treasury, for fiscal year 1994, total revenue and expenditures subject to audit
under GMRA would have been $1.6 trillion dollars from 12 Treasury bureaus and many
accounts. The three largest revenue collectors are -- the Internal Revenue Service $1.21 trillion,
the U.S. Customs Service $21.5 billion, and ATF $13.5 billion. Most likely, these entities
would always be subject to audit. However, if smaller entities can demonstrate they maintain
adequate financial management discipline as described above, the CFO should have the ability to
decide if annual, full blown audits need to be performed each and every year, versus some other
type of cyclical audit or review of selected accounts. I suggest this issue for your consideration
as well.
- 5-
CONCLUSION
I am in full agreement with my colleagues from the CFO Council who have worked very hard in
bringing to life the CFO legislation. As every year passes by, our Federal Agencies are better
able to protect the integrity of our operations, and more fairly report on our financial condition.
I would like to conclude by asking this Committee to recognize that much of the Chief Financial
Officers Act, the Government Perfonnance and Results Act, and the Government Management
Reform Act have set out the right goals and principles. Now, sufficient time and discipline is
required to fully implement these statutes, before we begin to realize their full benefit.
- 6·
DEPARTMENT
OF
THE
TREASURY
,
lREASURY ((fj
. ~. . ~.~) NEW S
...............................).<~~-=~~~
•
1 78 9;::.. . . . . . . . . . . . . . . . . . . . . . . . ..
OFFICE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220 - (202) 622·2960
STA1EMENT OF lREASURY SECRETARY ROBERf F.. RUBIN
AT 1HE DEVELOPMENT COMMfITEE OF mE
\IDRID BANK AND 1HE IN1ERNAl10NAL MONETARY FUND
WASlDNGfON, D.C
April 23, 1996
In our increasingly interdependent world, support for development is a good investment in our
future. As developing countries and countries in transition seek to consolidate the economic
progress they have made -- and as we tackle the difficult task of helping those who lag
behind -- effective and results-oriented international development cooperation is more
essential than ever.
The object of international economic cooperation is to achieve equitable and sustainable
development which enhances the quality of life and enlarges individual freedom, dignity, and
opportunity. Our challenge is to complement soood domestic economic policies which
promote the private sector and human resource development with external assistance which
incorporates the cutting edge of best practice approaches for achieving development results on
the ground.
The International Monetary Fund, the World Bank and the regional development banks playa
critical role in promoting and strengthening this collaborative partnership. The Development
Committee's discussions on the important issues on today's agenda -- IDA Multilateral
Debt, and the Conunittee' s Task Force on the MDBs -- provide an opportunity to further
demonstrate our commitment to this partnership.
Replenishment of IDA Resources
The International Development Association is the linchpin of international development
cooperation for the poorest COlU1tries. The United States is strongly committed to continued
participation in IDA and I welcome last month's agreement to replenish IDA resources.
The President's FY 1997 budget includes $934.5 million to fully clear outstanding U.S.
collUtlitments to the tenth replenishment. Securing this funding will not be easy. It is also
,clear from the very strong Congressional response to my testimony last week before the
RR-1023
For press releases, speeches, public schedules alld official biographies, call our 24-hour fax line at (202) 622·2040
House Appropriations Committee that the procurement restrictions contained in IDA's Interim
Trust Food have made a difficult task vastly more difficult. Nevertheless. secwing this
funding for IDA is and will remain a top Administration priority. I am committed to doing
all that I can in this effort.
IDA's policies and practices set out a comprehensive approach for the effective use of IDA
resources. We must all work hard to ensure that these policies and practices are strengthened
and deepened in line with lessons learned from development experience. I particularly
welcome and encourage IDA's increased efforts in primary health and basic education,
especially for girls. It is also vital that the World Bank continue to use its very considerable
expertise to improve the design and implementation of these and other projects to improve
their beneficial impact on the poor.
The funding constraints on IDA tmderscore the importance of focussing its limited resources
where they are most needed (i.e., to countries which lack access to alternative fmancing) and
where they can be used most effectively (i.e., to countries with a demonstrated commitment
to sO\Uld policies, poverty reduction, and environmental protection).
Multilateral Debt of the Poorest ColIDtries
Several years ago, the global community recognized that many of the very poorest COlUltries
in the world had accwnulated external debts over the past two to three decades which would
prove impossible for them to fully service. To improve the capacity of these countries to
develop and grow, we have agreed as a community to reduce their debts to governments by
as much as 67 percent -- provided they remain committed to sotmd economic management
and economic reform.. As in a corporate workout, the intent is to remove an lUlSustainable
burden from the past and help put these COtmtries back on their feet -- for their benefit and
for the benefit of the global community as a whole. The Paris Club has already provided
deep relief under this approach for several countries, and for two has undertaken fmal
reduction of the stock of debt.
For a nwnber of these poorest countries, however, even 67 percent reduction of debts owed to
governments will not assure a manageable debt profile. For them, additional action is
necessary -- including measures to ease the burden of debt to international fmancial
institutions. The United States is a strong advocate of timely action to help place those
countries with a demonstrated commitment to economic reform back on a more sustainable
development path, and to minimize the share of increasingly scarce development resources
required for servicing old debts. At the 1995 G-7 Halifax Summit, and again at last fall's
Development Committee meeting, the World Bank and IMF were asked to develop a
comprehensive approach to address the multilateral debt burdens of the poorest COWltries.
President Wolfensohn has made the multilateral debt issue a priority. We welcome the
preliminary proposals which he and Managing Director Camdessus have produced. This is
an important step forward. I urge the IMF and World Bank to present more specific
proposals for measures by the international financial institutions within the next few weeks.
3
The United States supports the concept of an IDA-administered trust fimd and the selective
use of grants to ease current debt burdens and constrain the future growth of debt. And we
urge the IMF to provide substantially more concessional tenns on its ESAF lending to eligible
countries in order to reduce the net present value of their IMF exposure. We also encourage
the regional development banks and other multilateral institutions to participate on an
equitable basis in this regard.
These actions by the multilateral institutions should be coordinated among themselves and
with the Paris Club to assure a comprehensive approach. Moreover, relief should be provided
within a reasonable time frame, closely linked to economic refonn efforts. While the Paris
Club can and should consider whether additional action by creditor governments is needed, it
is vital that the Paris Club and multilateral efforts go forward in tandem. We feel strongly
that the multilateral institutions should contribute their own resources toward this effort, and
that the success of the program should not depend on contributions from bilateral donors
which, in the case of the United States, will not be forthcoming.
I urge active and collaborative movement by all parties over the swnmer to assure that fmal
mechanisms can be adopted in the fall. We believe this effort can make an substantial
difference
in the economic and social development prospects of a number of the poorest countries. It is
an initiative which should remain at the forefront of our development agenda.
Report of the Task Force on Multilateral Development Banks
All donors have a responsibility to adopt assistance policies that are efficient and effective in
producing results on the ground, which focus on urgent development priorities, and which
help catalyze private resource flows. The Development Committee Task Force has made a
valuable and constructive contribution in assessing the vital development role being played by
the multilateral development banks (MDBs) in our rapidly changing world. The Task Force
has also presented us with a broad international consensus on how the l\.IDBs can best and
most effectively carry out their development mission. We strongly endorse the Report.
I would like to highlight, and provide particularly strong endorsement, to four of the Task
Report's many valuable conclusions:
•
the importance of having the rvtDBs "focus their assistance on countries demonstrating
their strong commitment to reducing poverty as part of a soundly based economic and
social reform program." This commitment by borrowers is necessary to make aid
effective. And as we discussed at our meeting last October, the composition of public
expenditure is one of the more important and visible measures of such a commitment,
as is good governance -- i.e., accountability, the rule of law, and public participation.
The tvIDBs should take timely steps to scale back or el iminate lending to governments
which lack a genuine commitment to poverty reduction, and redirect these resources to
governments which take development seriously.
4
•
the importance of looking at the MDBs as a group. Effective development
cooperation requires closer cooperation among the banks on the design and
implementation of colll1try-specific development strategies. Priority should be given to
operations evaluation and to ensuring widespread dissemination of lessons learned
from operational experience.
I welcome the recent commitment of the heads of the MDBs to strengthen
collaboration at all levels and to regularize their meetings. We hope this will lay the
fOlmdation for a productive day-to day working relationship among the institutions
which harnesses the vast talent and development experience of each for the benefit of
member countries. We also encourage a closer ongoing relationship between the
heads of the MDBs and the Development Committee on key cross-cutting issues of
concern.
•
the imperative that MOB operations produce clear development impact. Each of the
institutions needs to sharpen and strengthen its evaluation procedures to better
detennine what works and what doesn't, to distill our best practices, and to better
provide themselves and their borrowers with the information needed to make the
wisest development investment choices. In particular, each institution should give
priority to developing clear, specific and monitorable perfonnance indicators. We
fully endorse the Task Force's judgment that this is an area ripe for institutional
collaboration.
•
the importance of the MDB role in helping to create and maintain an environment of
effective government and a strong civil society. including a reliable framework of
rules and institutions. As the Task Force states: "Good policy includes the rule of
law, protection of legitimate economic activities and interests, a government's
accOlmtability to its citizens, effective measures to curb corruption, a participatory
approach to development, easy access to important information and services, and
sOlmd decision-making reflecting the actual needs of people." Unfortunately, in all too
many COWltries, corruption and corrupt practices are pervasive and seriously undermine
both economic efficiency, social progress, and aid-effectiveness. Moreover, corruption
is often associated with business practices that are inconsistent with viral development
objectives, such as soood and sustainable use of natural resources. Promoting good
governance must be a development priority.
I urge the banks and their members to incorporate these and other Task Force
recommendations into the on-going reform efforts now ooder way in all the banks to improve
their operational impact and better serve their borrowers. Successful reform will require a
long-tenn commitment and is a process which will have to be strengthened and deepened
with the benefit of experience.
International bribery lDldennines good governance and the effective use of scarce aid
resources. This is an issue which should be targeted and combated by increased IvIDB
collaboration. I support the Task Force recommendations that the MDBs should coordinate
5
procurement policies and rules and suggest that this be on the agenda at a heads of MDB
meeting. I support hannonl7.ation to the highest standard and applaud the numerous and
significant revisions the World Bank made last year to strengthen its procurement guidelines.
I urge all of the MDBs to work collaboratively to establish uniform rules, to require the use
of standard bidding documents, and to have strong headquarters oversight of the procurement
process. This would result in
increased transparency and efficiency gains for all of us as shareholders, for all bidders, and
particularly for borrowers.
The North American Development Bank (NADBank) has taken this process one step fiuther
by including an anti-bribery certification in its procurement guidelines. Under NADBank
guidelines, companies bidding for goods and services must certify that they do not bribe or
engage in other illicit practices. I urge all Development Committee members to press for
similar action in the World Bank and the regional development banks. I also suggest it be
included on the agenda of the next meeting of MDB heads.
Concl~ion
This meeting is taking place at a time of tmprecedented public scrutiny of the international
financial institutions. There is widespread skepticism of the value of "aid" and increasing
criticism of the institutions \\hich provide it. The overall improvements in human conditions
which have occurred in the last half-century refute the suggestion that the development effort
has been misconceived or a failure. At the same time, the tmeven pace of progress among
comtries and regions and the enormity of the development challenges we still confront leave
no room for complacency.
I therefore welcome and encourage the efforts which President Wolfensohn and his staff are
making to strengthen the effectiveness and efficiency of the World Bank Group. I also
appreciate the vast scope of challenges this entails. Development is not an easy process.
There are no quick fixes. And so much relies on encouraging domestic effort -- local
ownership, local commitment, local participation, and local implementation capacity.
The United States remains fully committed to working with the World Bank, and with the
regional development banks, in support of sOlU1d development.
UBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
FOR IMMEDIATE RELEASE
April 23, 1996
CONTACT: Office of Financing
202-219-3350
RESULTS OF TREASURY'S AUCTION OF 2-YEAR NOTES
Tenders for $18,777 million of 2-year notes, Series AE-1998,
to be issued April 30, 1996 and to mature April 30, 1998
were accepted today (CUSIP: 912827X56).
The interest rate on the notes will be 5 7/8%. All
competitive tenders at yields lower than 5.939% were accepted in
full. Tenders at 5.939% were allotted 38%. All noncompetitive and
successful competitive bidders were allotted securities at the yield
of 5.939%, with an equivalent price of 99.881. The median yield
was 5.922%; that is, 50% of the amount of accepted competitive bids
were tendered at or below that yield. The low yield was 5.890%;
that is, 5% of the amount of accepted competitive bids were
tendered at or below that yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
TOTALS
Received
$47,604,011
Accepted
$18,776,806
The $18,777 million of accepted tenders includes $1,169
million of noncompetitive tenders and $17,608 million of
competitive tenders from the public.
In addition, $1,650 million of
high yield to Federal Reserve Banks
international monetary authorities.
of tenders was also accepted at the
Reserve Banks for their own account
securities.
RR-I024
tenders was awarded at the
as agents for foreign and
An additional $926 million
high yield from Federal
in exchange for maturing
omCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W•• WASHINGTON, D.C .• 20220. (202) 622·2960
FOR RELEASE AT 2:30 P.M.
April 23, 1996
CONTACT:
Office of Financing
202/219-3350
TRBASURY'S WBEKLY BILL OFFERING
The Treasury will auction two series of Treasury bills
totaling approximately $27,000 million, to be issued May 2, 1996.
This offering will provide about $100 million of new cash for the
Treasury, as the maturing 13-week and 26-week bills are
outstanding in the amount of $26,901 million. In addition to the
maturing 13-week and 26-week bills, there are $17,953 million of
maturing 52-week bills. The disposition of this latter amount
was announced last week.
Federal Reserve Banks hold $11,395 million of bills for
their own accounts in the three maturing issues. These may be
refunded at the weighted average discount rate of accepted
competitive tenders.
Federal Reserve Banks hold $6,173 million of the three
maturing issues as agents for foreign and international monetary
authorities. These may be refunded within the offer.ing amount
at the weighted average discount rate of accepted competitive
tenders. Additional amounts may be issued for such accounts if
the aggregate amount of new bids exceeds the aggregate amount
of maturing bills. For purposes of determining such additional
amounts, foreign and international monetary authorities are
considered to hold $5,606 million of the original 13-week and
26-week issues.
Tenders for the bills will be received at Federal Reserve
Banks and Branches and at the Bureau of the Public Debt,
Washington, D. C. This offering of Treasury securities is
governed by the terms and conditions set forth in the Uniform
Offering Circular (31 CFR Part 356) for the sale and issue by the
Treasury to the public of marketable Treasury bills, notes, and
bonds.
Details about each of the new securities are given in the
attached offering highlights.
000
Attachment
Rll-I025
For press releases, speeches, public schedules and official biographies. call our 24-hour fax line at (202) 622·2040
HIGHLIGHTS OF TREASURY OFFERINGS OF WEEKLY BILLS
TO BE ISSUED MAY 2, 1996
April 23, 1996
Offering Amount .
$13,500 million
$13,500 million
Description of Offering:
Term and type of security
CUSIP number
Auction date
Issue date
Maturity date
Original issue date
Currently outstanding
Minimum bid amount
Multiples .
91-day bill
912794 3B 8
Ap:cil 29, 1996
May 2, 1996
August 1, 1996
February 1, 1996
$14,020 million
$10,000
$ 1,000
182-day bill
912794 3M 4
April 29, 1996
May 2, 1996
October 31, 1996
May 2, 1996
$10,000
$ 1,000
The following rules apply to all securities mentioned above:
Submission of Bids:
Noncompetitive bids
Competitive bids
Accepted in full up to $1,000,000 at the average
discount rate of accepted competitive bids
(1) Must be expressed as a discount rate with
two decimals, e.g., 7.10%.
(2) Net long position for each bidder must be
reported when the sum of the total bid
amount, at all discount rates, and the net
long position is $2 billion or greater.
(3) Net long position must be determined as of
one half-hour prior to the closing time for
receipt of competitive tenders.
Maximum Recognized Bid
at a Single Yield
35% of public offering
Maximum Award .
35% of public offering
.
. . .
Receipt of Tenders:
Noncompetitive tenders
Competitive tenders
Payment Terms .
.
.
Prior to 12:00 noon Eastern Daylight Saving time
on auction day
Prior to 1:00 p.m. Eastern Daylight Saving time
on auction day
Full payment with tender or by charge to a funds
account at a Federal Reserve Bank on issue date
'IREASURY
NEWS
OFFICE OF PUBUC AFFAIRS -1500 PE~NSYLVANIAAVENUE, N.W. - WASHINGTON, D.C .• 20220. (202) 622·2960
FOR IMMEDIATE RELEASE
April 24, 1996
Contact: Michelle Smith
(202) 622-2960
STATEMENT BY THE TREASURY DEPARTMENT ON FINANCIAL SUCCESSION
ISSUES AMONG THE REPUBLICS OF THE FORMER SFRY
The United States Government (USG) supports the efforts of successor states of the
former Socialist Federal Republic of Yugoslavia (SFRY) to reach negotiated arrangements
with external creditor groups. Although the USG does not take a position on any related
contractual disputes or issues, we welcome the progress a number of the former SFRY
republics have already made in reaching such arrangements with official and commercial
creditors. These are positive and necessary steps which these republics must take in order to
regularize relations with international creditors and to gain new access to international capital
markets.
In this context, we note the efforts undertaken by the Republic of Slovenia and its
commercial bank creditors to normalize Slovenia's relations with the international financial
community. Croatia has stated its intention to do likewise in the near future. Slovenia,
Croatia and Macedonia have also made considerable progress in normalizing relations with
official creditors. As part of efforts to support Bosnia, official creditors are examining ways
to alleviate Bosnia's heavy debt burden. We continue to encourage all the successor states to
the former SPRY to work cooperatively with the international financial community to reach
agreement on all financial matters pertaining to SFRY succession.
-30-
RR-1026
Far press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622·2040
UBLIC DEBT NEWS
Department of the Treasury - Bureau of the Public Debt - Washington, DC 20239
FOR IMMEDIATE RELEASE
April 24, 1996
CONTACT: Office of Financing
202-219-3350
RESULTS OF TREASURY'S AUCTION OF 5-YEAR NOTES
Tenders for $12,500 million of 5-year notes, Series H-2001,
to be issued April 30, 1996 and to mature April 30, 2001
were accepted today (CUSIP: 912827X64).
The interest rate on the notes will be 6 1/4%. All
competitive tenders at yields lower than 6.279% were accepted in
full. Tenders at 6.279% were allotted 61%. All noncompetitive and
successful competitive bidders were allotted securities at the yield
of 6.279%, with an equivalent price of 99.877. The median yield
was 6.250%; that is, 50% of the amount of accepted competitive bids
were tendered at or below that yield. The low yield was 6.200%;
that is, 5% of the amount of accepted competitive bids were
tendered at or below that yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
TOTALS
Received
$29,679,335
Accepted
$12,500,415
The $12,500 million of accepted tenders includes $404
million of noncompetitive tenders and $12,096 million of
competitive tenders from the public.
In addition, $450 million of tenders was awarded at the
high yield to Federal Reserve Banks as agents for foreign and
international monetary authorities. An additional $800 million
of tenders was also accepted at the high yield from Federal
Reserve Banks for their own account in exchange for maturing
securities.
RR-I027
DEPARTMENT
OF
THE
TREASURY
TREASURY!
.
NEWS
......................t~~~..................
OFFICE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASillNGTON, D.C. - 20220. (202) 622-2960
TESTIMONY OF CYNTHIA G. BEERBOWER
DEPUTY ASSISTANT SECRETARY FOR TAX POLICY
BEFORE HOUSE WAYS AND MEANS OVERSIGHT SUBCOMMITTEE
APRIL 25, 1996
RR-1028
For press releases, speeches, public schedules and official biographies. call our 24-hour fax line at (202) 622-2040
For Release Upon Deliyery
Expected at 9:30 a.m.
April 25, 1996
STATEMENT OF
CYNTHIA G. BEERBOWER
DEPUTY ASSISTANT SECRETARY (TAX POLICY)
DEPARTMENT OF THE TREASURY
BEFORE THE
SUBCOMMITTEE ON OVERSIGHT
COMMITTEE ON WAYS AND MEANS
UNITED STATES HOUSE OF REPRESENTATIVES
Madam Chair and Members of the Subcommittee:
I am pleased to appear before you today in response to the Subcommittee's request to
discuss some of the significant tax policy issues related to Federal debt collection practices.
My testimony today will address the issues that you have expressly directed toward the Office
of Tax Policy. In particular, you have asked for our comments on three issues related to
outsourcing Federal tax debt collections: (1) which collection activities carried on by the
Internal Revenue Service ("IRS") are "inherently governmental" and must be performed by
Federal employees; (2) the appropriate method for compensating private debt collectors for tax
debt collection services; and (3) the potential costs and benefits of using appropriated funds to
contract with private debt collection agencies for Federal tax debt collection services compared
to providing additional funding for collection efforts by IRS personnel.
You have also asked for our comments on (4) H.R. 757, which would expand the
authority under section 6402 of the Internal Revenue Code of 1986 to offset Federal tax
refunds to satisfy past-due State tax debts, and on (5) specific provisions of H.R. 2234, "The
Debt Collection Improvement Act of 1995," that would enhance the IRS's authority to collect
delinquent tax debts by establishing an automated system of levying on_certain non-means
tested Federal payments. After some preliminary comments on general policy issues raised by
the private collection of delinquent taxes, I will discuss each of these five specific topics.
General tax policy concerns about private debt collection
A number of policy issues arise in the context of any tax debt collection proposal, and
we would urge the Subcommittee to approach the topic of outsourcing tax debt collection
especially cautiously. As you know, representatives of this Administration have previously
expressed concerns about contracting out the collection of Federal taxes to private agencies.
See, e.g., Letter from Commissioner of Internal Revenue Margaret Milner Richardson to
Senator David Pryor (August 4, 1995), reprinted in 141 Congo Rec. S11538. The Treasury
Department too has concerns about turning over collection activity to private contractors.
First, this Administration and this Subcommittee are dedicated to protecting the rights
of taxpayers in connection with our debt collection activities. In this regard, I want to
commend the Committee on Ways and Means and the entire House of Representatives for their
recent passage of the Taxpayer Bill of Rights 2 ("TBOR 2") legislation. The significance of
taxpayer rights and the broad bipartisan support for protecting them are clearly reflected in the
unanimous vote of the House to approve that bill. The Treasury Department has been very
pleased with the bipartisan cooperation that has been demonstrated in developing and refining
the provisions of this legislation.
As you know, our commitment to taxpayer rights has led us voluntarily to implement
many of the TBOR 2 provisions through administrative actions. In January of this year, we
issued a Notice discussing the TBOR 2 items that we would be undertaking administratively,
~ Announcement 96-5, "Administrative Initiatives to Enhance Taxpayer Rights," 1996-4
I.R.B. 99, and in late March we announced that the 17 specific TBOR 2 items identified in the
Notice have all been implemented. This effort to accomplish administratively as much of
TBOR 2 as was feasible under our authority provides tangible evidence of the Administration's
ongoing commitment to protecting the rights of citizens in their contacts with the Federal tax
system.
There is inevitably a tension between protecting taxpayer rights and aggressively
collecting tax receivables. In its recent report, the General Accounting Office ("GAO")
expressed "concern" that "the IRS may be sending the wrong message to its collection
employees" by such actions as prohibiting the evaluation of collection employees based on
amounts collected, increasing the use of installment agreements, and making additional use of
offers in compromise. General Accounting Office, Internal Revenue Service ReceiYables 2528, Report No. GAO/HR-95-6 (1995). We are concerned that the protection of taxpayer
rights not be sacrificed in the enthusiasm to increase tax collections. Congress (in the first and
second Taxpayer Bills of Rights) and the IRS (in our administrative TBOR 2 initiatives) have
taken significant steps to ensure that taxpayers are treated fairly throughout the collection
process. It would be, in our view, inappropriate to apply these taxpayer protections to the
activities conducted by the IRS but not to private collection contractors. At a minimum,
therefore, we think it would be necessary to require that private contractors respect all
provisions of the law governing taxpayer rights.
- 2 -
Second, we are concerned about the difficulties that would result from disclosure of
taxpayer information to contractors. As the Subcommittee knows, section 6103 of the Code
protects the confidentiality of taxpayer return information, and the Administration firmly
supports the policy behind this provision. Disclosures of return information may be inevitable
under any system of privatized tax debt collection. What if individuals or entities that are in
the business of debt collection duplicate IRS data or merge that information with their own
private data bases? Disclosure to contractors will also present the IRS with more individuals
and more physical locations that it must supervise and audit for compliance with security
conditions and safeguards under section 6103(p) of the Code. Thus, any private system of tax
debt collection must comply strictly with the privacy restrictions of section 6103 and related
statutes.
In sum, we recognize that taxes must be collected, and that the system requires that
w~ere one taxpayer has paid his share and another hasn't, the IRS should pursue collection
from the delinquent. However, the Administration believes that the important goal of
improving debt collection procedures must be consistent with protecting taxpayer rights and
maintaining taxpayer privacy and confidentiality. The proper resolution of this issue lies in a
careful balance between these two aims and in thoughtful and well-considered implementation
of any proposals.
As you know, however, in H.R. 2020, the Treasury, Postal Service and General
Governmental Appropriations Act of 1996, Congress authorized $13 million for the Treasury
Department to conduct a pilot program to test private collection of Federal tax debts, and the
IRS has the pilot project underway. This provides an opportunity to evaluate the issues
inherent in outsourcing of debt collection.
I will now turn to the specific topics you have asked us to comment on.
1.
"Inherently governmental" functions
The Constitution provides that Congress has the power to levy and to collect taxes.
Congressional authority to collect taxes has been given to the Secretary of the Treasury. Tax
collection is intrinsic to government as an exercise of the state's sovereign authority, and the
Supreme Court has held that sovereign powers generally cannot be contracted away. ~
Contributors to Pa, Hasp. V. City of Philadelphia, 245 U.S. 20 (1917); Texas & New Orleans
R.R. Co. V. Miller, 221 U.S. 408 (1911). A key element of any proposal to privatize tax debt
collection must be to evaluate the legal issues surrounding any attempt~ delegation of
authority. In particular, there may be impediments to outsourcing tax debt collection functions
under current Federal procurement acts.
For example, functions cannot be delegated by contract to persons other than officers
or employees of the United States if those functions are "inherently governmen~, ". which the
Office of Management and Budget describes as "so intimately related to the publIc mterest as
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to mandate performance by Government employees," such as activities that require the
exercise of discretion in applying Government authority or that involve tax collection.
Office of Management and Budget, Circular No. A-76 (August 4, 1983); Office of
Management and Budget, Policy Letter 92-1,57 Fed. Reg. 45096 (Sept. 30, 1992).
s.ee
Examples of tax collection powers that would I1Qt be delegable under current law would
presumably include the authority to compromise a tax debt for less than the full amount due,
the ability to seize property before a judgment confirming the amount of the tax debt, or other
similar situations involving the judgment of an Executive Branch officer. On the other hand,
delegable functions that might be obtained commercially include: providing locator services to
establish a mailing address and phone number for delinquent taxpayers; mailing notices or
letters that provide information on the amount of a tax delinquency and payment options;
making telephone contacts to remind taxpayers of a delinquency, to provide information on
payment options, and to secure intentions of repayment; providing lockbox service for receipt
and processing of tax payments; providing data processing services that are performed in
conjunction with tax collection activities; research and data gathering; and financial auditing
support services. ld.
Further, certain ministerial acts are required under existing law, such as the prompt
daily deposit into the Treasury of Federal taxes collected under section 7809 of the ~ode.
This requirement parallels the similar Prompt Deposit Act, 31 U.S.c. § 3302, which generally
applies in a non-tax context. The rule of these provisions would, for example, prohibit paying
private collectors of Federal tax debts directly out of the amounts they collected. Also, rules
related to tort liability, the applicability of state or Federal debt collection practices laws, and
of course the taxpayer rights and privacy concerns discussed previously would all have to be
examined.
Presumably, Congress can change all of these laws, but we would recommend that a
thorough review of the extent of such changes be undertaken before Congress requires the IRS
to privatize activities beyond the pilot program.
2.
Compensation of private tax debt collectors
As this Subcommittee knows, the first Taxpayer Bill of Rights expressly prohibited the
IRS from making compensation or personnel actions (such as evaluations) based on the
revenue collected by its agents. ~ Omnibus Taxpayer Bill of Rights § 6231, Pub. L. No.
100-647, 102 Stat. 3730, 3734 (1988). The Administration supports this approach.
We are aware that contingent compensation arrangements are commonplace in private
debt collection agencies. The Administration believes that the compensation for any private
debt collection initiative should be subject to the same constraints as are imposed on the IRS.
If such a contingent compensation arrangement is not allowable for our own employees, over
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whom we have supervisory control, why would we permit it for private contractors for whom
the rights of citizens may not be the highest priority?
3.
Use of appropriated funds
As I have noted, the prompt deposit requirements of existing Federal law would require
private collectors of Federal tax debts to be paid with appropriated funds rather than out of the
amounts they collected. We believe this restriction is a proper one.
Exceptions to the prompt deposit requirements have been rarely granted, and when they
are, Congress closely monitors compliance. For example, in the TSOR 2 legislation recently
passed by the House, the IRS was granted the authority to use the income earned in undercover
activities to pay additional expenses of such operations. ~ H.R. 2337 § 1205. However, the
authority was extended only temporarily, and section 7608 (c) (4) of the Code, which requires
annual reports by the IRS to Congress under this authority, was amended to impose additional
reporting requirements with respect to the undercover operations, proceeds, and expenditures.
Id., § 1205(c).
We believe that the general rule of payment only out of appropriated funds should
apply to private debt collectors, and other approaches should only be considered after we have
more experience.
Refund offset to collect state taxes -- H.R. 757
The Internal Revenue Code currently permits the IRS to offset Federal tax refunds in a
variety of situations. Section 6402(a) authorizes offsetting Federal tax refunds in order to
satisfy other Federal tax debts, and sections 6402(c) and (d) likewise authorize offsetting
Federal tax refunds to collect past-due, legally enforceable debts other than delinquent Federal
taxes. A taxpayer is entitled to a refund only to the extent that the tax overpayment exceeds
these delinquent debts. The IRS thus currently has in place a four-tiered refund offset program,
under which the IRS offsets Federal income tax overpayments by, in order of priority, the
taxpayer's (1) delinquent Federal tax liabilities, (2) past-due child support obligations which
have been assigned to a State under the Social Security Act (" AFDC child support"), (3)
delinquent non-tax debts owed to other Federal agencies, most notably defaulted student loans,
and (4) past-due child support obligations which have not been assigned to a State ("nonAFDC child support"). Each of these kinds of debts are offset based on a representation from
the creditor agency that the debt is valid and enforceable and that ce~n procedural
requirements have been met to ensure due process to the debtor. The IRS does not engage in
an independent investigation of the validity of any claim.
H.R. 757 permits Federal tax overpayments to be offset to collect certified State tax
debts. In general, the Treasury Department supports this proposal, which will foster and
enhance cooperation between the Federal tax authority and State tax administrators. Treasury
- 5 -
and the IRS identified some technical issues in the original bill introduced by Mr. Jacobs,
involving the priorities for making offsets, the disclosure of tax information, and some other,
relatively minor items. These technical problems have been resolved, and we expect the
resolutions to be incorporated in the final drafting of the provision.
Some concerns have been expressed that States might ask the Federal government for
refund offset of tax debts that are not valid or legitimate. H.R. 757 provides procedural
guarantees intended to ensure that this does not occur. We would not support a refund offset
provision that would require the Federal government to determine independently the validity of
each underlying State tax debt presented to it for collection. Such a requirement would create
a burden that would outweigh the benefit of the refund offset program to the Federal
government.
Levy on Federal payments
Improving the Government's ability to recover delinquent debts is a priority of the
Administration. Last summer, the Administration forwarded to Congress draft legislation
intended to achieve this goal, which was introduced by Representative Hom as H.R. 2234.
This legislation will provide enhanced tools to recover delinquent debt owed to the Federal
government more efficiently and effectively, while protecting the due process rights of the
debtors. H.R. 3019, the Continuing Appropriations for Fiscal Year 1996, as currently
pending, contains many debt collection provisions drawn from this bill that do n.m involve
Federal tax debts. I will confine my comments to the tax policy aspects of the Administration
initiative.
First, by way of background, Congress has granted the IRS power to collect Federal
taxes by levying on "all property or rights to property" of the taxpayer under section 6331 of
the Internal Revenue Code. In particular, section 6331(e) permits a "continuous" levy on
certain types of regular or continuous payments, such as salaries and wages. This authority
permits the IRS to attach all or a portion of such regular payments by serving a single notice of
levy on the person making such payments to the taxpayer. Section 6334(a) of the Code grants
certain exceptions to the IRS's levy power for specifically enumerated categories of property.
The Administration's debt collection initiative, as reflected in H.R. 2234, contains two
changes to the IRS's levy authority. First, this provision would permit a "continuous" levy to
be made on certain kinds of non-means tested, recurring Federal payments, while continuing
to exempt certain other Federal payments. This proposal, which would not change the kinds
of property that the IRS can reach with its levy authority, is essentially a way to reduce
paperwork burdens. It would eliminate the need for the IRS to serve repeated notices of levy
in order to attach all or a portion of a non-exempt, recurring payment; instead, the IRS could
simply serve the notice of levy a single time. Since the continuous levy power is already
available to the IRS to collect delinquent taxes from salary and wage payments, we believe that
- 6 -
it should also be available to collect delinquent taxes from other kinds of Federal payments,
including in particular regular payments to Federal contractors for services provided.
As is now the case, the authority to make a continuous levy on Federal payments would
be used only on a case-by-case basis at the discretion of individual revenue officers. As the
IRS witnesses here today can explain, the levy procedure is ordinarily a "last resort" for
revenue officers to use in the collection process, usually employed only after a taxpayer has
ignored repeated notices of the delinquent tax account or has otherwise failed to make adequate
payment arrangements. The Administration expects that this will remain the case, and that
continuous levy on Federal payments will be used only as one of the last steps to collect
unpaid taxes.
The second part of the Administration's proposal would change the exemptions from
levy, so that the following non-means tested payments from the Federal government would no
longer be exempt: Federal workmen's compensation payments, which are currently exempt
under section 6334(a)(7); and annuity or pension payments under the Railroad Retirement Act,
and benefits under the Railroad Unemployment Insurance Act, both of which are currently
exempt under section 6443(a)(6). We have also recommended a change in the exempt amount
of Federal wages, salary, and other income under sections 6334(a)(9) and 6334(d). Under
current procedures, section 6334(d) provides a formula for computing a minimum exempt
amount of wages, salaries, or other income received on a weekly basis. Because this formula
is complex and unique to each taxpayer, we propose a new and simpler mathematical
exemption, under which only up to 15 % of Federal salaries or pensions would be subject to
levy; in other words, at least 85 % of such payments would continue to be exempt.
Congress has always permitted Social Security payments to be subject to levy, and the
Administration's proposal would not change current law in this regard. As a practical matter,
however, the authority to levy on Social Security is rarely used, and the only intended
consequence of this proposal is to reduce paperwork burdens by making such levies
continuous.
This legislation will improve collections while providing revenue officers with
flexibility to take extraordinary situations into account. As noted above, the levy provisions
are generally used only in the final stages of the collection process, after other efforts to collect
delinquent taxes have failed. In the event that a levy on non-means tested Federal payments in
excess of the exempt amounts were to cause a "significant hardship," the Administration
anticipates that the Taxpayer Assistance Order procedure administered ~y local Problem
Resolution Officers under section 7811 of the Code would provide additional relief.
Conclusion
The Administration looks forward to working with this Subcommittee in the future to
enhance the collection of Federal tax debts, while protecting taxpayer rights and taxpayer
- 7 -
information. In particular, we expect to report to the Subcommittee at the conclusion of the
IRS private debt collection pilot project to evaluate the success of that program. Further, we
ask that the Subcommittee favorably consider the two specific legislative proposals that I have
discussed.
This concludes my testimony. I would be pleased to answer any question that you may
have.
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NEWS
ornCE OF PUBUCAFFAIRS. 1500 PL"IJNSYLVA.'UAAVENL"E, S.W.• WASHDlGTON. D.C .• 20220. (202) 622·2960
TESTIMONY OF JEFFREY R. SHAFER
UNDER SECRETARY FOR INTERNATIONAL AFFAIRS
BEFORE HOUSE BANKING COMMITTEE
APRIL 25, 1996
lUt-1030
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5-21-96
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Jeffrey Shafer
Under Secretary of the Treasury
for International Affairs
testimony before the
House Bankina Sub-Committee on
International Monetary Policy
April 25, 1996
Mr. Chairman, Members of the Committee, I welcome the opportunity to testify
before you this morning. We are requesting authorization for U.S. participation in the
International Development Association, the IMF's Enhanced Structural Adjustment Facility,
the African Development Bank, and the newly established Bank for Economic Cooperation in
the Middle East and North Africa, which is in the process of creation.
Mr. Chairman -- let me speak frankly. Today, United States leadership and
credibility are on the line. For several decades we have been the leading voice in these
institutions. Several years ago we led these organizations' members'iri insisting that they
undertake sweeping reforms -- to hone their work, cut costs, and ensure that they serve our
interests -- as a condition for continued U.S. support.
By and large, the institutions for which we are requesting authorization today have
undertaken the dramatic changes that we demanded. Here at home, we have honored the
pledge made by then Secretary Bentsen, and reiterated by Secretary Rubin, to bring down
significantly U.S. contributions to these institutions. The Administration has laid out a
roadmap that will bring U.S. spending on the International Financial Institutions way do~
through FY 2002. Our IDA-ll commitment is less than haIf what we committed inIDA-lO.
Our request for the African Development Fund is also less than half our previous request.
We do not foresee either the World Bank or the IDB ever needing another capital increase.
In short, we have accomplished what we set out to do. Now, we are at a crossroads.
The United States owes some $1.56 billion in overdue obligations to these international
financial institutions -- obligations made in good faith and with bipartisan support. These
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arrears threaten our ability to continue to lead these organizations. They threaten our ability
to ensure that they continue to serve our interests. And they come at a time when European
countries and Japan are demanding greater influence commensurate with their own levels of
support, which are rising vis-a-vis our own.
Mr. Chairman, U.S. support for and leadership in these organizations is not a
question of Charity. Rather, it is based on their proven capacity to deliver concrete economic
and security benefits to all Americans -- through exports, jobs, the expansion of new
markets, and the enhancement of stability in sensitive regions.
The United States can have no more important economic goal than opening and
expanding emerging markets for U.S. exports. To that end, nearly every developing nation
that has prospered and become a major U.S. market -- South Korea, Indonesia, Thailand,
Chile, and over a dozen more -- has seen economic growth launched and bolstered by
multilateral development bank programs. Indeed, going further back, the World Bank was
instrumental in lifting Europe and Japan out of post-war chaos.
We can have no more important security interest than anchoring peace and stability in
countries formerly at war or emerging from communism. The development banks are active
in every important region where the United States seeks to anchor stability -- in Central
America, in Southeast Asia, in Southern Africa, and more recently in Eastern Europe and the
fonner Soviet Union. Recently, IDA and the IMP began the critical job of helping to
reconstruct Bosnia. With Congressional approval, the Bank for Economic Cooperation in the
Middle East and North Africa will help former enemies of one another in that part of the
world build the prosperity and economic relationships that are the underpinning for lasting
peace and prosperity.
The historic embrace of democracy and market-based economics by many developing
countries means that the opportunities for economic success and stability have never been
'greater. Developing countries doubled their purchases of our products over six years - to
$218 billion in 1994. In fact, developing countries have become our fastest growing export
markets, taking more than 40 percent of U.S. exports and supporting about 4 million U.S.
jobs. Development banks have played an integral role in bringing about this welcome trend.
They have provided unprecedented support for the trade and investment liberalization,
regulatory and legal reform, and investments in nations' own people that have made this kind
of growth possible.
Today, a whole new list of countries are embracing the kind of market-based reforms
that will open their economies for growth. The opportunities for U.S. exports are enonnous.
All four of the programs for which we are requesting authorization are explicitly focused on
market-based reform.
Mr. Chairman, never has· it been more important for us to ensure that we continue to
lead these institutions. Never have these re-engineered institutions been better poised to
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serve our interest in opening markets, and providing jobs for Americans. But if these
institutions are going to continue to serve Ol.-lf economic and security interests, then the
United States must maintain its leading role in them, even as our financial contribution
declines. To do that, we must meet our obligations in a timely fashion. If we don't, our
ability to steer IDA, the African Development Bank, the ESAF, and the Middle East
Development Bank will weaken. Others may step up to the challenge, and reap the benefits
that we abandon. That would be costly to us. But it would be even more costly if the
institutions were to drift without clear direction. I fear that others cannot replace the
leadership we have provided.
The International Development Association
Let me tum now to the specific institutions. The International Development
Association, or IDA as it is known, is the largest element of our request. We are asking for
an authorization of $550 million to meet the remainder of our standing commitment to the
IDA-lO replenishment. Our appropriations request is for $934.5 million.
IDA was established by President Eisenhower in 1960 as an affiliate of the World
Bank. Its role was to make loans to the poorest countries on concessional terms. Now, in
1996, it is appropriate to ask whether this program remains in our own national interest. I
believe it does, for three compelling reasons.
First, IDA supports basic investments and market-building reforms that make
capitalism in underdeveloped countries possible, so that they can become important United
States trading partners. In effect, IDA is helping to remake developing countries in the
imaie of the United States and the other industrialized democracies. It has not always been
so, but this is what IDA is doing today. This type of reform does not come easily. There is
no natural constituency for market-oriented capitalism in many of the poorest countries.
IDA's support is essential in getting these nations on the right path.
India provides an excellent example. Since 1991, World Ban~ and IDA support for
India has been conditioned on India's opening its market to U.S. and other goods and
investment, and pursuing other economic refonns. World Bank-IDA lending conditioned on
India's lowering its tariff barriers helped to bring maximum tariffs down from 400 percent to
65 percent. Since then, the United States has become India's largest foreign investor. In
1994, late Commerce Secretary Ron Brown announced additional contracts for U.S. firms
amounting to more than $7 billion. From 1994 to 1995, our exports to India jumped from
52.3 billion to 53.3 billion.
India's achievements are but one example of IDA's market-building impact. Almost
all of the major emerging market success stories -- including South Korea, Indonesia,
Thailand and Turkey -- were once IDA recipients. All of these countries are now major
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customers for U.S. exports. In fact, IDA has 20 "graduates" which took $48 billion in U.S.
exports in 1994 alone. That supported roughly 850,000 U.S. jobs.
This pattern of IDA support for market reform followed by large increases in U.S.
exports repeats itself again and again. Today we find markets even in the poorest countries.
Present IDA borrowers, for example, took some $20.2 billion in U.S. exports in 1994, up
from $14 billion in 1988, and enough to support some 100,000 more U.S. jobs. The
economic benefits to the United States have been clear: IDA-backed reforms lead to higher
U.S. exports, which produce more jobs in our domestic economy.
Second, the United States relies on IDA to advance our strategic interests. IDA helps
lay the foundation for stability in key regions, as it is doing by supporting economic
transition and democracy in parts of the former Soviet Union. IDA cements incipient peace
and democratization processes, as it is doing in Haiti, and just this spring, began to do in
Bosnia. There, IDA is devoting some $550 million to support the nuts and bolts tasks
needed to get the Bosnian economy up and running again -- everything from setting up lines
of credit for small businesses to lending money for farm-seed to helping the Bosnians rebuild
shattered government offices and homes. IDA is laying the foundations for the economic and
social reconstruction without which peace in Bosnia will never be secure, and the courage of
U.S. peacekeeping troops will have been for naught.
Third, IDA is a very cost-effective way for us to assist poor countries or nations in
distress. Over thirty countries contribute to IDA. The U.S. share of funding has dropped
dramatically -- from 42 percent to roughly 20 percent. Repayments on past loans now
finance 25 percent of all new lending. This means that IDA is able to leverage about $7
dollars for every dollar the United States contributes. That is a highly effective way for us
to invest our scarce resources.
Important Reforms
Three years ago, this Committee's predecessor authorized p~ipation in the first two
years of the tenth replenishment of IDA, leaving the third year unauthorized until certain
reforms had been undertaken at the World Bank. Chief among these were establishment of a
more transparent information policy and an independent inspection panel. I am pleased to
report to you today that those important reforms are now in place.
Under U.S. leadership, the Bank has become far more transparent in its operations,
making much more inionnation available to the public. Procurement guidelines have been
revised to bring competitive bidding up to a high standard. The Bank's independent
inspection panel is ensuring that projects comply fully with Bank policies. Further, the Bank
is undertaking a whole series of internal refonns to improve effectiveness, accountability,
and the quality of its operations. For example:
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Ind~ndent private sector and sustainable development departments are up and
runnmg.
The internal budgeting process is being put on a fully business like basis,
making individual managers responsible for results and cost-efficiency.
Substantially greater resources are going to project supervision,
implementation, and field work.
Comprehensive Country Assistance Strategies ensure that individual projects
fully support the Bank's overall objectives in individual countties.
The Bank has put into place a rigorous set of policies on the environment.
Environmental considerations are now at the heart of project development, not
an afterthought.
The Bank has also responded to U.S. efforts to control administrative costs. Next
year's administration budget will be 10 percent lower in real terms than the budget two years
ago. First class air travel has been eliminated and benefits have been capped.
The Development Committee Task Force established in April 1994, and on which I
represented the United States, endorsed these reforms as it laid out a broad set of
recommendations for further change throughout the MDB system.
The Bank's culture and approach have changed, and continue to change in response to
these efforts. In our view, the reforms address the concerns that have been expressed by this
Committee and its predecessor in the past. Much of the credit must go to the vision
exercised by the late Lew Preston, and the energetic leadership now exercised by Jim
Wolfensohn.
To say that we are very pleased with this progress is not to say that the Bank is
perfect. We will continue to exercise vigilance and oversight to ensure that the Bank
continues to serve our interests, and does not slip back into failed policies.
Interim TnIst Fund
Let me say a word about the Interim Trust Fund that IDA is establishing to fmance
some projects in fiscal 1997. Our FY 1997 request of $934.5 million will pay down our
IDA-tO commitments. It will not cover any of our IDA-ll pledge. Other nations do not
want IDA to wait for the United States before providing new resources to fmance projects.
To that end, these countries have agreed to set up a one year Interim Fund of approximately
$3 billion. Procurement eligibility for IDA credits financed by this fund would be limited to
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nationals of countries contributing to the fund, and those member countries eligible to borrow
from the World Bank. Projects funded by "regular IDA resources will not be affected.
U
To determine which projects are to be financed by the Fund, rather than by IlregularU
resources, IDA on July 1 will hold a random drawing of all projects scheduled from October
1, 1996 through June 30, 1997. Treasury and the U.S. Executive Director's office are
working closely with the World Bank to ensure that this process of project selection is truly
transparent, open, and random. The resulting list of projects selected for Trust Fund
financing will be disseminated shortly thereafter. Treasury, based on its dialogue with U.S.
private sector leaders, will ensure that this advance notification occurs. We will also conduct
a detailed briefing for U.S. companies during the next two weeks on the administration of
the Interim Trust Fund.
.
Of the $7 billion in IDA resources expected to be available in FY 1997, U.S. firms
will still be eligible to bid on more than 50 percent -- over $3.5 billion - funded from IDA10 payments and sources other than the Trust Fund. We have strongly opposed procurement
restrictions and resisted their inclusion in funds in which the United States partiCipates. But
as a non-participant, we could not shape the Trust Fund's rules. Most donors participating
in the Interim Trust Fund insisted on this approach because they confront budgetary pressures
similar to or more serious than our own. For them, this step was seen as essential to .
generating domestic and political support for their participation, in the absence of the United·
States.
Mr. Chairman, the establishment of the Interim Fund illustrates why the United States
has to remain in and contribute to IDA if it is to serve United States economic and security
interests. The organization is doing essential work. It is anchoring the embrace of free
markets, privatization, and economic reform around the world. IDA provides us with direct
economic benefits .. And the organization is implementing sWeeping reforms advocated by the
United States. For these reasons, we are requesting the support of this subcommittee for a
full authorization of the remainder of the Bush Administration commitment to IDA-lO.
Enhanced Structural Adjustment Facility
Mr. Chainnan, the IMP's Enhanced Structural Adjustment Facility or ESAF is a
natural complement to IDA. ESAP programs provide a medium-term framework for
macroeconomic stabilization and structural reforms in the poorest countries. This in turn
lays the foundation for successful IDA programs in support of longer-term structural
measures and project lending. Together, ESAF and IDA provide the ingredients for
sustainable, market-led growth.
Over half of ESAP's borrowers are in Africa, but the facility is increasingly
supporting poor countries in the fonner Soviet Union as they make their transition to the
market.
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We are requesting authorization of the $75 million that remains outstanding from the
United States' $100 million commitment to the ESAF. The money will be paid out over
many years. Still, it is important to authorize that contribution now, to show that the U.S.
Congress stands behind the U.S. commitment.
Let me offer three specific points about the ESAF.
First, ESAF is the only loan program in the world for the poorest countries that
brinis together the various components of successful adjustment under one coherent
framework. This ftamework includes both macroeconomic stabilization - such as reductions
in budget deficits - and free-market .refonns designed to unleash the private sector. As I
have said, ESAF and IDA lending go hand in hand. ESAF programs create the foundation
for the kinds of longer-tenn efforts supported by IDA - including prudent investments in
infrastructure development, privatization, and refonns of financial and agriculture sectors.
ESAF loans are on terms which the poorest countries can afford, but on conditions
that ensure that refonns are put in place. Loan disbursements are phased over a tJlree..year
period subject to satisfactory policy implementation. Policy objeCtives typically include
reducing budget deficits, cutting inflation, privatizing, downsizing government bureaucracies,
opening-up trade regimes to foreign competition, deregulating, and improving governance.
The rest of the global financial community -- public and private - generally look to the
establishment of an ESAF framework before launching their own initiatives. ESAF support
is a precondition for MDB initiatives in many instances, for Paris Club debt reschedulings,
for commercial bank debt restructurings, and -- increasingly -- for bilateral assistance. In
shon, ESAF is the catalyst for change in poor countries. Actual ESAF funding is modest,
but the impact is substantial.
Second, our pledge to ESAF is very modest in proportion ·to the size of our economy
and the leadership we exercise in the organization. We are not contributing to the SIS
billion ESAP loan account. Rather, the U.S. has pledged to contribute only SI00 million to
the $3.1 billion account that subsidizes interest payments by ·the poOrest countries. That
amounts to less than a nickel for every dollar contributed by others tQ... this account.
Our contribution was also designed to minimize pressures on the already
overburdened foreign assistance account. Therefore, the $100· million will be spent over a
lS-year period, with outlays to begin in FY97. The fact that the outlays do not begin until
next year should not be taken as a reason to delay authQrization of the full balance of $75
million, however. It is important to authorize the·full amount of our contribution, to
demonstrate our continued support for refonns in the poorest countries -of the world and to
assure us the necessary leverage to influence the direction and content of ESAF programs.
Third, we have made progress in fulfilling the request put forward by Congress in
agreeing to partial authorization for the extended and expanded ESAF; that the IMP provide
greater disclosure of its activities. The Fund adopted a policy for automatically declassifying
most documents of historical interest and making them available to the public. Provision has
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been made for timely release of background documents related to Article IV consultations if
countries agree.
At our urging, the IMP has also become a ferce fer greater disclesure by member
countries. Just this month the Executive Board of the IMF gave (mal appro.val to. its Special
Data Disseminatio.n Standard (SODS) for provisien o.f ecenemic and financial statistics to the
public by member co.untries. Invitatio.ns for subscriptio.n to. the SODS have been sent to all
IMF member countries. Subscribers are expected to. be countries that participate in
international capital markets or aspire to do so. The standards call for advance dissemination
of data release calendars and the simultaneous release of data to all interested parties. The
Fund will establish and maintain an electronic bulletin board on the Internet which will
identify members that subscribe to. the standards. In addition, the bulletin board will provide
wide and easy access to infonnation about countries' statistical practices. Work is also
underway within the IMF on General Data Dissemination Standards toward which the Fund
would wo.rk with all its members to' improve the quality of data that they regularly supply to
the IMF.
There should be no further hesitation in authorizing our full pledge to this IMP
facility. ESAF's success clearly advances our policy interests in promoting market-based
sustainable development leading to economic growth and political stability in areas deficient
in both. Not only is this the right and prudent direction to take, but it is also good for
business.
IDA and ESAF
IDA and ESAF are working in tandem to support the near-tenn and longer-term
refonns that countries must enact if they are to become dynamic markets for our exports.
The U.S. exported over $2 billion in exports to ESAF countries in 1995. The largest
markets were clo.sest to home, in Latin America - Honduras, Nicaragua and Bolivia - but
we had some notable successes in Africa as" well - Uganda and Cote D'Ivoire, for example.
Let me offer some examples of countries where IDA and ESAF are working together
to put countries on the path to sustainable growth:
o
Uaanda is now in its fifth year of ESAF-backed refonns, and received an annual
average of $190 million in IDA support over the last three years. It has used this
support to introduce a fully market-determined exchange system and liberalize prices
and interest rates. Inflatio.n has declined from 240 percent in the late 1980s to single
digits today. The civil service and military have been reduced in size. Real GDP
growth last year was 10 percent, and is expected to be at least as high this year.
o
Armenia received a three-year $148 million ESAF loan that will build upon
achievements o.f previous short-tenn assistance it has received under other IMP
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programs. That, coupled with $117 million in IDA commitments for FY95, is
helping Armenia maintain a stable exchange rate and low inflation, accelerate the pace
of privatization; and contain the budget deficit within its targeted range. Stabilization
and liberalization helped Armenia achieved an estimated 5 percent GDP growth rate
last year, and the IMF projects 6.5 percent growth this year.
o
Cote d'Ivoire and other CFA franc zone countries agreed to devalue their overvalued
currency by SO percent in January 1994, with support from the IMF and World Bank.
The IMP backed Cote d'Ivoire's adjustment efforts with a $500 million ESAF
program. Some $300 million committed by IDA last year is helping the nation to
privatize agriculture markets and invest in municipalities. The tum-around has been
impressive. After 6 years of economic stagnation (1 percent average annual decline
in GDP), Cote d'lvoire's economy began to recover in 1994, and registered 6.S
percent growth in 1995. The budget deficit has been reduced by some 2/3 over the
past two years (from 13.3 percent of GDP in 1993 to 4.5 percent of GDP last year).
Exports are booming, and privatization efforts are accelerating.
o
Mali made important strides in reducing flnancial imbalances, containing inflation,
improving the competitiveness of its economy and revitalizing the private sector under
an ESAF program. IDA support totalling $66 million last year is helping Mali
restructure industry, energy, and agriculture, and make critical infrastructure
investments. Real GDP growth was about 6 percent and average consumer price
inflation was cut in half. The IMP approved a new three-year loan of $91 million to
build upon this success. Under the follow-on program, Mali will continue to
eliminate distortions in resource allocation that will improve the climate for private
sector investment and will target the alleviatio.n of poverty by raising primary
education enrollment rates and improving basic primary health care.
o
Bolivia overcame a major economic crisis in the mid-1980s and has pursued a
comprehensive economic reform effort, supported in part by some $295 million in
ESAF loans. Inflation has been reduced from hyperinflationary levels to about 12
percent, and one of the region's poorest countries has enjoyed 4- percent GDP growth
yearly over the 19905. Now Bolivia is moving ahead with longer-term structural
measures, many of which are being supported by the $500 million that IDA
committed over the last five years. These include financial market and pension
refonn, power sector improvements, and a unique effort to allow foreign investment
in fonnerly state-held companies, while distributing remaining shares to Bolivians.
Despite the successes that ESAF programs have so clearly achieved, many nations
continue to need backing for economic reform efforts -- especially in the transitional
economies of the former Soviet Union and mSub-Saharan Africa. We see continued U.S.
participation in the ESAF as a vital element in meeting these challenges and essential for
helpillg to move the poorest countries toward economic independence.
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The African Development Bank
Third, we are requesting authorization of $135 million for the paid-in portion of a
new U.S. capital sUbscription to the African Development Bank - the obligation that should
result from negotiations, no:w' under way. I should note that this authorization request
accompanies our request for $50 million in appropriations for the initial payment of a
proposed $200 million U.S. share in the seventh replenishment of the African Development
Fund, which was previously authorized. The Bank provides loans on market-based terms to
creditworthy borrowers. The Fund provides loans on hi&hly concessional terms to the
poorest countries.
The United States has been a member of the Fund since 1976, and of the Bank since
1983. We are the largest non-regional Bank shareholder, and the 3rd largest shareholder
overall. We are also the second largest contributor to the Fund, behind Japan.
Mr. Chairman, I can cite some examples of African economic reform efforts that
worked with support from the African Bank - such as privatization in Mali, or agricultural
reform in Ghana. But overall, in recent years the African Bank's' perfonnance has been a
major disappointment. Chronic political instability and economic mismanagement in many
African countries, coupled with inefficiency and mismanagement inside the institution,
hindered the Bank's efforts.
Two years ago the United States brought matters to a head. We led the non-regional
donors in suspending negotiation of a Fund replenishment. We demanded and won deep and
sweeping reform of Bank and Fund administration and operations.
Our insistence on reform before funds are provided has paid off. With the coming of
a new President, Omar Kabbaj, the way the Bank looks and works is changing. Twenty
percent of Bank staff have been dismissed. More than two out of every three managers have
been replaced. A comprehensive audit is underway, and an independent study advocates
increased non-regional control over the institution. A tight new lending policy has been
implemented that will keep non-creditworthy borrowers out of market~te propams. The
entire portfolio bas been examined and over $700 million in loans cancelled. A' tough new
sanctions policy on arrears has been enacted, and Bretton Woods institutions have begun
preliminary work on developing strategies to help the poorest countries alleviate their debt
burdens.
President Kabbaj, I should note, is actually in Washington today where he is meeting
with Members of Congress to listen to your concerns and explain how he intends to meet
them.
In short, the Bank is implementing the most comprehensive and ambitious reform _
effort ever taken by an institution of its kind. More needs to be done, and it will take time
before all the benefits appear. Nonetheless, we and the Bank's other non-regional
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shareholders are now convinced that the Bank is on the right path. It will SOOn be positioned
to make a strong contribution to growth on a continent where more and more countries are
turning toward market-based economic and social reform.
Against this background, a modest capital increase for the Bank to go along with a
modest replenishment for the Fund ar~ necessary and justified. Both will protect our
investment in the institution and presexve our capacity to continue to direct and control the
Bank's refonn program.
The Middle East Development Bank
Finally, we are requesting $52.5 million in authorization for U.S. participation in an
essential component of the Middle East peace process: the Bank for Economic Cooperation
and Development in the Middle East and North Africa. That money will pay the first of five
installments in the U.S. pledge to what promises to be the core institution in beginning the
process of economic cooperation, integration, and private-sector investment among nations
emerging from several decades of destructive conflict.
Mr. Chairman, the United States has a fundamental stake in promoting peace in that
formerly war-tom region. We have invested heavily in security and trade relationships with
nations there. Now we, like them, are poised to reap the economic and security benefits of
peace.
But peace is fragile. And it is about more than signing treaties or pulling back
annies. As Western Europe learned after World WaI n, peace becomes secure only when it
is cemented by prosperity. Trade, investment, and commercial exchange knit fonner
enemies together in peace. The private sector must provide the foundation for that to occur.
After decades of war, the Middle East and North Africa lack many of the economic
underpinnings for trade, commerce, and growth. Cross-border infraSWcture is insufficient.
Established channels for regional investment are few. The re&ion is one the least
economically integrated of the world.
The United States was approached jointly by Egypt, Jordan, Israel, and the
Palestinians, to lead the establishment of a Middle ,East and North Africa development bank
to help the private sector till those voids. Unlike traditional development banks, the MidEast Bank will directly support private sector projects. Core activities will include financing
cross-border projects to tie the region closer together, supporting the privatization of stateowned enterprises, and identifying other promising private-sector led opportunities for
investment. It will do all these things by catalyzing private sector finance - placing a heavy
emphasis on co-financing with the private sector, and leveraging private resources. That will
set the stage for the kind of market-based growth that the Middle East needs for prosperity,
and a secure peace.
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Conclusion
Mr. Chairman, continued support for all the institutions I've discussed today - IDA,
ESAF, the AfDB, and the MEDB - is essential for our key economic and security aims.
These institutions foster economic liberalization and policy reforms. In doing so, they open
up vast new markets for United States goods and services, while anchoring political and
social stability. And they do all that for pennies to the dollar, leveraging the money we
provide by drawing on contributions from many other sources.
Fifty years of strong, bi-partisan support for the multilateral development banks
testifies to bi·partisan recognition of the U.S. interests that they serve. If they are to
continue to serve those interests, then the United States must maintain its leadership role in
these institutions. For that reason, I urge the Committee to authorize, on a bi-partisan basis,
the funding levels that the Administration has requested. Thank you.
- 12 -
DEPARTMENT
IREASURY
OF
THE
TREASURY
NEWS
OFFICE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W•• WASHINGTON, D.C•• 20220. (202) 622-2960
DEPARTMENT OF THE TREASURY
Statement of James E. Johnson
Assistant Secretary (Enforcement)
April 25, 1996
Before the House Committee on Appropriations
Subcommittee on Treasury, Postal Service and General Government
:Mr. Chairman, Mr. Hoyer, members of the subcommittee, thank you very much for asking me to speak today
about the Bureau of Alcohol, Tobacco and Firearms' role in Treasury enforcement. Director Magaw will
speak further to the bureau's specific criminal and regulatory efforts.
I was sworn in as Assistant Secretary of the Treasury for Enforcement barely seven weeks ago. Although I
am new to the department, I have worked closely with Treasury law enforcement bureaus for years. From
1990 until this past March, I served in the US Attorney's Office for the Southern District of New York as an
Assistant United States Attorney. In New York, and now here in Washington, I have been consistently
impressed by the men and women of the ATF and our other Treasury bureaus.
It has been a pleasure to come to know Director John Magaw. By all accounts Director Magaw has done an
excellent job as ATF's leader. In my short time on the job, I have personally benefitted from the insight and
wisdom that are drawn from his 30 years oflaw enforcement experience.
In terms of personnel -- special agents and other officers -- Treasury law enforcement resources approach
those of the Department of Justice. This division of law enforcement authority is appropriate, because a
balance ofpolice power -- like the balance of political power -- is important to maintaining democracy.
Americans have never chosen to create a unified national police force. Today, when citizens are skeptical of
law enforcement, we should be wary of calls to consolidate police power in any single institution.
As you know, ATF collects revenue, regulates legitimate industries and has criminal enforcement authority.
There are significant benefits to this union of duties.
,
ATF's current structure creates mutually-productive partnerships with private industry. These
partnerships foster voluntary compliance by law-abiding businesses, which enables us to focus more of
our enforcement resources on the areas of highest risk for criminal behavior.
,
ATF employs multi-faceted enforcement approaches. Often, regulatory or compliance personnel are
necessary to perfect criminal cases. For example, an explosives investigative team may include
auditors, regulators and bomb technicians.
RR-I031
(more)
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
-2-
We received an additional reminder of the valuable work ATF perfonns just yesterday when President Clinton
signed the Counter-Terrorism legislation. Mary Jo White, the U.S. Attorney for the Southern District of New
York, noted ATF's vital participation in the investigations leading to the arrest and conviction of the terrorists
who killed six and injured more than 1,000 when they tried to blow up the World Trade Center. As the
members of this subcommittee know well, ATF made a similar contribution to the Oklahoma City bombing
investigation.
The new counterterrorism law acknowledges ATF's expertise in conducting bombing investigations. Under
the new law, ATF will take the lead in developing taggants technology. As the President noted when he
signed the bill into law, taggants will make it easier for police to trace bombs to the criminals who made them,
and bring those criminals to justice.
At present, I have responsibility for Main Treasury's oversight role in enforcement matters. Under Secretary
Robert Rubin's leadership, I intend to continue to exercise appropriate oversight over our bureaus.
The Office of Enforcement convenes weekly meetings of our enforcement bureau heads and I meet with each
bureau head on a one-on-one basis. The enforcement bureau heads also meet regularly with the Deputy
Secretary.
In addition, Main Treasury Enforcement has instituted policies and procedures to increase prior review and
planning of major law enforcement operations:
•
•
•
•
Bureau heads are required to notify the Office of Enforcement of "any significant operational matters
that affect the Bureau's missions, including major high risk law enforcement operations."
Sensitive undercover operations must be reviewed and approved by a multi-agency committee that
includes a representative of the DOJ Criminal Division.
The policy on contacts with the media about pending investigations or cases has been clarified and
standardized.
We have issued a unifonn use offorce policy, and are close to making final new unifonn policies on
the handling of informants.
In short, we take our oversight responsibilities very seriously. Treasury is proud of ATF and the
important work it does. This is as it should be. ATF agents risk their lives every day, pursuing some of the
most dangerous criminals to ever threaten our society. I look forward to working with Director Magaw and
the men and women of ATF in the days ahead as they carry out their important mission. I will be happy to
answer any questions .you may have.
-30-
DEPARTMENT
OF
THE
TREASURY
NEWS
omCE OF PUBUCAFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220 - (202) 622-2960
FOR IMMEDIATE RELEASE
April 25, 1996
STATEMENT OF TREASURY SECRETARY ROBERT E. RUBIN
The massive seizure by the U.S. Customs Service of 2,300 pounds of cocaine on the
Texas border -- worth more than $100 million on the street -- demonstrates that Operation
Hard Line is making a real difference in stopping the flow of dangerous drugs into the
United States on our southern border. In little more than a year, Operation Hard Line has
shown the Customs Service's ability in dealing with shifting smuggling patterns and methods.
Considering the immense volume of vehicular traffic and the hundreds of millions of people
crossing the border each year, Customs has accomplished a great deal. With the more than
650 additional enforcement personnel the President has requested in the 1997 budget,
Operation Hard Line can become an even more effective tool to keep drugs out of the United
States.
-30RR-1032
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
Department of the Treasury
U.S. CUSTOMS SERVICE
FOR IMMEDIATE RELEASE
R96-088HOU
u.s.
APRIL 25 I
1.996
CUSTOMS AGENTS SEIZE MORE THAN A TON OF COCAINE, THREE
TRACTOR-TRAILERS FROM SOUTHEAST HOUSTON WAREHOUSE
HOOSTON --
u.s.
Customs Service Commissioner George J. Weise
traveled from Washington, D.C. via Laredo, Texas to congratulate
CUstoms agents here today for their excellent execution of a
controlled delivery of more than a ton of cocaine which entered
the united states last week at Laredo, Texas.
-This is an excellent example of well coordinated
cooperation amonq law enforcement
said.
offices,~
Commissioner weise
-The CUstoms agents .displayed outstandinq investigative
skills throuqh their excellent surveillance and controlled
delivery.
r am proud of the good working relationship and the
outstanding results Which the
u.s.
customs Service enjoys with
the law enforcement community here in
Houston.~
customs inspectors at the Colombia Solidarity Port of Entry
selected a 1989 Kenworth tractor pulling a Tempte refrigerated
trailer for an intensified Operation Hard Line inspection when it
arrived Thursday afternoon.
Although the trailer appeared to be
empty, customs inspectors performed a battery of tests.
Drillinq
into the roof of the trailer produced a white, povdery substance
~hich
field tested positive for cocaine.
Further inspection of
the interior revealed other indicators of a possible smuqqling
venture.
narcotics.
customs canine -Bartman" alerted to the scent of
A ftBuster" density-meter reveal.ed unusual readings in
REPORT DRUG SMtJr.r.T TNr.
'_52nru~r
4'
r'D~
the last four feet at the end of the trailer.
CUstoms agents then conducted a controlled delivery of the
rig to a warehous.e in southeast Houston.
They conducted a search
warrant of the warehouse last Friday, and discovered nearly 2,300
pounds of cocaine in the roof of the trailer.
trailer containing the cocaine.
Agents
sei~ed
the
Agents also seized two other
refrigerated trailers in the warehouse.
trailers had similar false compartments.
Those additional
With an estimated
street value of $45,000 per pound, the cocaine is valued at
nearly $104 million.
Arrested in Houston were:
Walter G. Mace, Jr., a 56-year-
old Oregon man; Ray 3. Garza, a 43-year-old man from Houston;
Randall E. Gourley, a 52-year-old man from Rocharon, Texas; Tomas
Santana, a 38-year-old Mexican man living in Modesto, California;
and Ramon Contreras, a 19-year-old man from Irving, Texas.
The
men were charged with violation of federal drug trafficking and
smuggling laws.
They face federal charges of imprisonment of ten
years to life.
Assisting Customs in this operation were DEA agents from
Houston and Laredo, officers from the Harris county Sheriff's
Office, and the Pasadena Police Department, and the Laredo state
and local investigative task force.
Operation Hard Line, launched in February 1995 to enhance
narcotics interdiction efforts along the southwest border, has
resulted in a 24 percent increase in seizures of heroin, cocaine,
and marijuana.
Additional notable Hard Line seizures include
3,080 pounds of cocaine seized in Brownsville in early April, 800
pounds of cocaine seized in Houston in March, 54 pounds of heroin
seized at Del Rio in January, 2,285 pounds of cocaine seized in
Brownsville last
~ovember;
ana several huqe cocaine and large
heroin seizures in the state of Arizona.
Hard Line techniques have decreased the percentage of port
runners by 40 percent.
The success of Operation Hard Line has
caused its expansion to Puerto Rico and the Caribbean.
Throuqh
the recently implemented Operation Gateway, customs officers and
aqents in Puerto Rico and the Caribbean will use the proven tools
and techniques implemented for Operation Hard Line to interdict
narcotics in their area.
# # # #
For more information, please call: Special Agent in Charge
Leon Guinn at 7l3-985-0500 or Public Affairs specialist Pamela
Previte o'Brien at 713-313-2912.
DEPARTMENT
1REASURY
OF
THE
TREASURY
NEWS
OFFICE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C .• 20220. (202) 622-2960
FOR IMMEDIATE RELEASE
April 26, 1996
RUBIN, RENO AND MCCAFFREY TO VISIT MIAMI CUSTOMS SITE
Treasury Secretary Robert E. Rubin, Attorney General Janet Reno and Director of
National Drug Control Policy Barry McCaffrey will visit the U.S. Customs Service at the
Miami Seaport (Shed E) on Monday, April 29, at 8:30 a.m. to be briefed on the latest drug
interdiction activities taking place in South Florida.
Secretary Rubin, General Reno and General McCaffrey will be joined by Customs
Commissioner George Weise and local Customs officials.
The briefing for press will include recent drug seizures, a canine demonstration and
remarks by Secretary Rubin and Commissioner Weise.
Also included in the briefing will be the inspection of goods using a large stationary xray unit and a mobile x-ray van; the manual inspection of goods in several cargo containers
and coolers; and a seized container of 31,430 pounds of marijuana and 518 pounds of hash
oil.
Treasury Department contact:
Customs Headquarters contact:
Customs Miami contact:
Chris Peacock (202) 622-2960
Pat Jones (202) 927-1770
Michael Sheehan (305) 536-4126
DIRECTIONS: From U.S. 1, turn east onto Port Blvd. and cross the bridge leading to the
Port of Miami. Proceed straight to the first and second security check points, identifying
yourself at each point. Shed E is the large warehouse further up on the right with a large
blue E in the upper left corner.
- 30 -
RR-1033
Far press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
DEPARTMENT
TREASURY
OF
THE
TREASURY
NEWS
omCE OF PUBliC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. _ 20220 _ (202) 622-2960
FOR IMMEDIATE RELEASE
April 29, 1996
REMARKS OF TREASURY SECRETARY ROBERT E. RUBIN
DRUG STRATEGY ANNOUNCEMENT
GEORGE WASHINGTON CARVER MIDDLE SCHOOL
MIAMI, FLORIDA
The Clinton Administration is deeply committed to dealing with the problem of
drugs in our society. This is critical to you and the kind of world in which you'll growth
up. Dealing with the drug issue is critical to having good neighborhoods and attracting
jobs to those neighborhoods, to reducing crime, and it is critical to the quality of your
schools and the quality of your lives.
Before I talk about some of our recent actions Treasury to combat drugs in
America, I want to introduce two of the central figures in Treasury's efforts in that
regard. We have with us today the newest member of Treasury's enforcement team -Assistant Secretary of the Treasury for Enforcement, Jim Johnson. He oversees the law
enforcement bureaus at Treasury that fight drugs on all fronts. This work includes
Customs' interdiction of drugs at the border, ATF's anti-gang programs and efforts to
reduce drug-related violent crime, and our financial crime experts who track the
proceeds of the drug trade to help catch those responsible.
In the long run one of the most critical programs with respect to fighting drugs
may well be dealing with the conditions that give rise to the use of drugs, and the
prevention and treatment of drug abuse. But having said that, I'd like to focus this
morning on law enforcement, and the man who runs Treasury's front-line defense against
drugs, Commissioner of the U.S. Customs Service, George Weise, is with us today.
The Customs Service has had a number of important successes lately. Earlier
today I was at the Customs facility and received a briefing on how the personnel there
found 800 pounds of cocaine in a load of cut flowers coming in from Columbia. Cut
flowers are fine. Cocaine is forbidden. Last week, George told me his personnel found
well over a ton of cocaine hidden in secret compartments in a tractor trailer in Texas as
part of Operation Hard Line along the Southwest Border. That program is working well,
and because smugglers always shift tactics when you put the heat on, the Customs
Service now has Operation Gateway, its initiative in Puerto Rico and the Caribbean.
RR-1034
(more)
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
If we're doing well on the Southwest Border -- and we will be clamping down on it even
further -- it's natural that the smugglers would look to other ways to get into the United
States. We're committed to stopping them at all entry points.
I've just mentioned a few examples, but let me mention another example, one that
is a case of government spotting a problem and reacting before the problem can become
a lot larger. This is an example of government working the way it should work. Early
last month, the Customs Service worked together with the Food and Drug
Administration and the Drug Enforcement Administration to prohibit the importation of
a very dangerous drug called rohypnol. It's lO-times as powerful as Valium. Law
enforcement officials told us it was becoming an abuse problem. In one three-week
period alone, back when it was legal to bring this drug in, lOO,OOO tablets carne in
through one city alone. Since the ban, several attempts have been made to smuggle this
drug into the country. Someone tried to mail 5,000 pills form Panama to Fort
Lauderdale, but we caught them and made four arrests.
The best evidence that the interdiction is working is that the price of this drug has
doubled on the street. We're making a difference, preventing this drug from being more
widely abused and pr~venting it from endangering more teenagers. Again, this is a case
of government seeing a problem and working quickly to address it. And it's a symbol of
how this administration is working to address the drug issue.
The President will be here shortly to discuss the our anti-drug strategy in broader
terms. I'll close by saying that I'm proud of the work the Customs Service and the other
Treasury bureaus are doing to fight drugs. These efforts will contribute immensely to
our national strategy and, over time, to reducing the terrible effects drugs have on our
society. And with the more than 650 additional enforcement personnel we have
requested in the 1997 budget, Customs interdiction efforts in particular will be an even
more effective tool to keep deadly drugs out of the country.
Thank you.
-30-
DEPARTMENT
TREASURY
OF
THE
TREASURY
NEWS
OFFICE OF PUBilC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W•• WASIllNGTON, D.C .• 20220 • (202) 622-2960
Laying the Basis for Prosperity
Remarks by
Lawrence H. Summers
Deputy Secretary of the Treasury
Society of American Business Editors & Writers
New Orleans
April 29, 1996
Introduction
It is a critical moment in our nations' history. Americans are weary after a long
period of conflict. Increasingly, they are preoccupied by problems at home, not abroad, and
wish to withdraw from foreign entanglements.
Our elected leaders vow to shrink government. Companies are increasingly successful,
but workers are fearful for security. Tariffs are thrown up. Concerns rise about immigration.
There is talk in some quarters of keeping America "pure." Quotas and new laws reduce the
flow of immigrants. It is the best of times for some, and the worst of times for others.
I suppose I could be describing 1995. I am actually describing 1925. America is on
the brink of a series of catastrophic economic and foreign policy errors. These will help send
the world shuttling toward what are perhaps the darkest years in human history.
The lessons of the 1920s are powerful. They point up the fact that America is not
secure, even when we are the world's sole superpower. They speak eloquently about the need
for American leadership and engagement even in regions of the world that seem far off or
unimportant in the near-term. And they offer important examples of the ways in which our
international economic policy, and our national security, are inextricably intertwined.
We live in a period of great opportunity, and great challenge. Opportunity, because
our economic foundation is stronger than it has been since John F. Kennedy was President.
Opportunity, because the millions of people around the world have adopted markets and
democracy, creating a burgeoning global economy. Challenge, because as President Clinton
has said, and as the people of New Orleans have done for so long, to take advantage of that
global economy America must compete, not retreat.
RR-I035
Far press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
The United States faces three priorities in the years ahead if our prosperity is to be
secure. First, we have to continue to lay the foundation for a strong economy here at home.
Second, we must show leadership abroad -- to open markets, to maintain security, and to keep
emerging market countries on the right path toward democracy and economic growth. Third,
we've got to make sure that all Americans have a chance to share in our prosperity. Let me
say a word about each of these three priorities. I'll start with the need for a strong foundation
for growth here at home.
A Strong Economic Foundation
When I look at the state of our economy today, I think it is stronger than it has been
any point in my professional lifetime.
•
America has generated over 8.5 million jobs over the past three years of this
Administration, giving us a 5.6 percent unemployment rate -- down from 7.3 percent
when the President took office.
•
Job creation has already beaten the President's own pledge of 8 million jobs over 4
years. And that comes against a backdrop in which all the other industrialized
countries have been losing jobs, and seeing their unemployment rates soar in recent
years.
•
We have seen substantial increases in corporate profitability, which rose more than 25
percent after tax from 1992 to 1994, and another 15 percent through the first three
quarters of 1995.
And it's there in a whole range of indicators that tell you how well Americans are
doing, from mortgage interest rates that, even with recent rises, are still only about 120 basis
points above the 25 year lows they hit in 1993, to poverty figures, which over this
Administration's first year in office came down for the first time in half a decade.
Private Sector Renewal
What accounts for the economic strength that we are seeing? American business has
proven itself to be remarkably dynamic, compared to other countries. We've got the most
flexible finance in the world, we've got the most competitive markets in the world, and are
always forcing ourselves to compete against the world's best.
•
Look at the American manufacturing sector, and the kinds of changes that IBM, or
General Electric -- which quadrupled its earnings over the past decade -- have
implemented. Theirs is a record that many companies elsewhere in the world have yet
to achieve.
2
As important as the rebirth of old industries is the development of new ones. We are
uniquely suited to compete in the information age.
•
•
Microsoft is now one of the 10 most valued companies in the United States in terms of
market capitalization. AIG is one of the 16 most valued companies in the United
States.
Look at industries outside of manufacturing -- Federal Express, Disney, Netscape. It is
clear that a high proportion of the global leaders in these industries come from the
United States.
In short, we are best at the stuff of tomorrow.
A Well-Managed Economy
Alot of the credit for our economy must go to a private sector that is doing alot of
things right, to compete in the global economy. But the private sector wouldn't be able to
compete if we did not have an Administration that is doing something that hasn't been done
in decades: managing our economy well.
•
The President's budget reductions have brought the government deficit down for three
years in a row, for the first time since Harry Truman was President.
•
At about 1.9 percent last year -- down from 4.2 percent in 1992 -- we had the smallest
general government deficit as a proportion of GDP among all the Group of Seven
industrialized countries. We look set to match that performance in 1996.
•
The Administration has been able to cut government spending because it has trimmed
the fat off of government. In fact, we have shrunk the size of government, to the
point where the number of government employees is at its lowest level in 30 years,
and the number of government employees as a percentage of civilian non-fann labor is
at its lowest level since 1933.
Why is that important? It's important because showing some backbone in fiscal
discipline is what permitted a broad drop in interest rates.
•
Interest rates are historically low for this point in an economic cycle, with the longbond only about 85 basis points above its all time low of October, 1993.
Low interest rates prompted by the Administration's fiscal rigor are what gave our economy a
healthy boost. But they have also sent investment in business equipment soaring.
3
•
Investment in business equipment has been growing at double digit rates for three
years in a row for the fIrst time in 30 years. That is important, because it means that
America is making the investments in capacity which are necessary for this economy
to keep growing at a sustainable, non-inflationary pace.
In short, we are enjoying something that hasn't been seen in this country since John
F. Kennedy was President: a low-inflation, investment-led recovery.
That is signifIcant. It is signifIcant because one clear lesson emerges from post-war
economic history. No recovery has ever died of old age. Recoveries have died because they
have been squeezed by rising interest rates prompted by the Federal Reserve, with inflation
control as the motive.
Inflation rises. People get properly nervous. The Fed rightly tightens the reins. The
economy starts to skid, and we experience a recession. That was the pattern in 1958. That
was the pattern in 1967. That was the pattern in 1970. That was the pattern in 1974. That
was the pattern in 1982. And that was the pattern in 1989.
If we are going to avoid a repeat of that pattern, it is essential that inflation be kept
under control. And inflation is at its lowest level since the 1960's.
It is necessary that we expand capacity so that the demand for output can rise without
giving rise to price pressures. And that is why it is so signifIcant that investment is leading
this recovery, to the point where our investment figures are more favorable than they have
been in a generation. The President's wise macroeconomic management is what has allowed
this crucial alignment of low-inflation, low-interest rates, high-investment to occur.
Maintaining American Leadership
A strong economic foundation here at home is important. But it would mean less if
we did not use American leadership to make sure that there is a strong global economy to
which we can sell our products, and a secure global system to protect Americans' security and
prosperity.
Take a step back for a moment. When historians of the future study our era, it may
not be the end of the Cold War -- the end of a struggle between two major powers -- that
they see as most important. Rather, the most salient event may be the fact that this is the era
in which some 3 billion people in Asia, Eastern Europe, and Latin America mounted on a
rapid escalator to modernity. That has happened, because for the fIrst time in human history,
nations around the world have agreed on one model for economic prosperity and political
liberty. That model is the American one, of free markets and democracy. And its acceptance
around the world offers remarkable opportunities for U.S. jobs, exports, and prosperity in the
decades ahead.
4
There is no question that trade has been the engine powering our economy over the
past half decade.
•
Export growth has averaged 8 percent yearly since 1992, more than double GDP
growth. U.S. firms now export more than $700 billion, enough to support some 10
million U.S. jobs. And these are good jobs, paying some 15 percent more than
average wages.
If you ask yourself where the fastest export growth has come, the answer is emerging
markets -- markets which already support some 4 million high-paying U.S. jobs.
If the opportunities for Americans are going to expand, and the number of high-paying
jobs grow, then we can have no more important priority than making sure that other countries
barriers to our products come down, and markets open to our goods.
That is why this Administration has launched the largest campaign to open markets to
our goods in decades.
•
We've completed well over 100 market-opening agreements with other countries to
bring down barriers and make sure the playing field is level.
•
We completed the Uruguay Round, and our Framework Agreement with Japan is
already delivering results. Export growth to Japan in products where we've reached an
agreement has been three times as great as growth in other products.
American Leadership for Security
Opening market is one aspect of American leadership. Another is making sure that
those countries on the path to free-markets and growth stay on the right course. Of course
that is about garnering the opportunities that prosperous developing countries offer to
Americans -- through exports and jobs. But helping countries make the transition to growth
and democracy also involves another recognition: that conflict has its roots in frustration.
American leadership to anchor growth in developing countries is essential for anchoring
stability, and protecting America's security in a world in which challenges remain.
It cannot be an accident that after a half-dozen wars in a hundred years, each followed
by peace treaties, then again by renewed conflict, war in Europe became unthinkable after
1945. Much of that had to do with the economic vision shown by a few on both sides of the
Atlantic after the war. It was a vision that supported rapid rebuilding as essential for
normalization and prosperity. And it advanced economic integration, as essential to ensuring
that people stood to gain more in shared peace, than in divisive conflict.
5
Today, as we look to those regions that remain essential for American security, we
must draw on that same vision. It is clear, that the prospects for stability in Eastern Europe
and the former Soviet Union have much to do with those vast lands making a successful
transition to market economics and prosperity. It is clear, that the degree to which Asia
avoids conflict, and that ideological, cultural, and border disputes do not derail that regions'
march to progress, has much to do with the extent that all sides of the Pacific are bound
together in prosperity, and rising powers integrated in the global economic and trading
system. And it is clear, that the prospects for Central America knowing true stability, for
apartheid truly withering away in southern Africa, and for peace firmly taking hold in the
Middle East, have much to do with the extent to which wealth fmds its way to Nicaragua,
industry takes hold in Soweto, and commerce extends from Cairo to Tel Aviv to Qatar.
Supporting Russia's Transition
Let me focus on one enormous country whose successful transition to democracy and a
market-based economy are essential, both for our prosperity and our security: Russia.
For 50 years we were locked with the Soviet Union in a cold war. Today we have the
chance to reap the fruits of our historic victory. Our policy of making money available to
support Russia -- but only if Russia held to the path of reform -- has worked to keep Russia
on the path of change.
Four years ago the streets of Moscow were filled with the talk of mass starvation.
The failing communist system couldn't deliver food from the countryside to the city.
Today, shops are sprouting up on every street -- and they're filled with goods. Real
consumption by Russians is up 20 percent since 1992. An estimated 70 percent of industry is
in private hands, and key sectors such as plastic, metals and steel are growing. The
government estimates that some 900,000 new small businesses have been created, and with
them, 14 million new jobs.
The Russian government has made important progress. Russia finally broke the back
of inflation -- it's come down sharply from 18% monthly in January 1995 to 3% by the end
of the year. The ruble has appreciated sharply -- 15 percent this past spring. It remains 7
percent above its April 1995 level, and well within its corridor. Russia seems poised for
growth.
Some, viewing the insecurity surrounding the upcoming election and possible retreat
from reform, want the United States itself to pull back. They argue that now is no time to be
putting money into Russia. They say our policies have been misguided -- too dependent on
helping one leader, or one party, or one point of view.
6
Make no mistake. United States leadership of international efforts to support Russian
transition have not been premised on one man, or one party, or even one narrowly defined
worldview of those in power. As I said, from day one of the Clinton Administration, our
policies have been premised on Russia's taking the clear, defmable steps needed to anchor
economic transition.
Latin America
Russia's is an immense market -- some eight time zones spanning two continents. But
there is a closer vista of opportunity, one that lies right on New Orleans doorstep. That
region is Latin America.
Consider the United States stake in trade with the countries to our south.
•
•
•
•
Mexico has been one of our fastest growing major trading partners.
Chile, with 14 million people, buys more than India with 920 million.
We sell more to the countries that make up MERCOSUR than we do to China.
We sell about as much to Costa Rica, with three million people, as we do to all of
Eastern Europe, with about 100 million.
All told Latin America and the Caribbean purchased some $92 billion of American
goods in 1994, almost as much as did the European Union. These exports support hundreds
of thousands of American jobs. They will grow enormously as the process of reform
continues, and as prosperity continues to spread in our hemisphere.
Summit of America
How can we make sure these markets continue to open, and that prosperity comes?
The answer is integration. Integration cements change. Integration provides confidence and
stability where they are needed. And integration ensures that our regions' citizens come to
see their prosperity as intertwined. Creating a prosperous, integrated region stretching from
Canada to Chile is the best way to make sure that Latin America does not lapse back into the
statism and authoritarianism of the past.
It was in recognition of the benefits of integration that President Clinton invited
leaders from our hemisphere's democracies to gather at the Summit of the Americas in 1994.
There they agreed to form a Free Trade Area of the Americas. But they also agreed on a
second broad set of measures needed to lock in prosperity throughout the hemisphere: the
need to develop Latin America's capital markets, so that the region can have the investment
and finance it needs to grow. That will be the task that Ministers from throughout the
hemisphere will further when they gather at New Orleans in just a few days. They will agree
on a range of initiatives -- from identifying priorities for financial market development to
7
commissioning a survey of national laws affecting private sector finance, and establishing a
training institute for supervision and examination of financial regulators. All of these will
help Latin America develop the transparent, well-regulated and integrated financial systems it
needs to grow sustainably, and become an even more vibrant trading partner for New Orleans,
and all the United States.
Opportunity for All Americans
Let me turn fmally to a third priority that must be high on our economic agenda over
the coming years. The prosperity that all Americans crave must also be prosperity that all
Americans can share. That can only happen if all Americans have the tools they will need to
take advantage of the opportunities that the global economy affords.
Only an educated workforce can adapt and compete quickly in a dynamic global
environment. That is what the recent budget debate was all about. President Clinton strongly
supports a balanced budget. But he also insists on a balanced economy. He realized that
making investments in our children's and workers' education is just as important as fiscal
responsibility -- and that both could be accomplished. The budget that Republicans and
Democrats finally agreed upon embodies that recognition, by restoring nearly $3 billion more
for key education, health, and labor programs which the President realized were a sound
investment for all our futures.
Children need intensive education, and more education early, in an environment that
places a premium on skills. That is why the budget restores $195 million more for Goals
2000 (to a total of $350 million), $953 million more for Education for the Disadvantaged (to
a total of $7.2 billion), and $169 million more for Head Start (to a total of $3.6 billion).
Workers need greater assurance that they will not fall through the cracks during the
time it takes to adapt to changing opportunities. That is why this bill restored $233 million
more for Dislocated Worker Assistance (to $1.1 billion), as well as $132 million more for
school-to-work programs at the Education and Labor Departments (for some $350 million).
The President realized that of course, Medicare costs need to be brought under control.
But Medicare must remain a flrst class health system. That can only be the case if the growth
rate in Medicare reimbursements does not fall too far below private programs. So we must
await further progress in reining in all health care costs -- including those in the private
sector.
The President realized that American workers must have the technology and tools they
need to compete -- but that some investments cannot be made by the private sector. I think
the Internet is the best example. The Internet started as a government sponsored research
program two decades ago. Now it has mushroomed into an enormous boon for American
businesses and creativity.
8
•
That is why the President insisted on $221 million for the Advanced Technology
Program, which sponsors investments in the technologies that will give America an
edge in the 21 st century.
The Minimum Wage
Finally, let me turn to an initiative that the President strongly supports -- a rise in the
minimum wage. Raising the minimum wage is enormously important -- if all Americans are
to share in the strong economic foundation that we are laying, and if working Americans are
to have a base from which to create better lives for themselves and their children.
Some believe the minimum wage will cut down on the number of jobs. We have
found no evidence of that. On the contrary, the minimum wage is about encouraging work,
and keeping people off of welfare. It's about easing working Americans' insecurity at a time
when some are worried about change. And it's about making sure that while America
competes better and enjoys greater prosperity, no Americans slip through the cracks.
Conclusion
Let me conclude where I began. The United States economy is moving forward. For
the flIst time in a generation, we are putting our fiscal house in order. We are opening the
world economy to our exports, and we are doing better in international markets. In the
aggregate, three years of wise management has left our economy stronger than it has been in
30 years.
The challenge now is to strengthen the foundation for progress, and take steps to
ensuring that all Americans have the opportunity, the tools and the basis to succeed as we
enter the next century. Thank you.
9
DEPARTMENT
IREASURY
OF
THE
TREASURY
NEWS
OFFICE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASIllNGTON, D.C .• 20220. (202) 622-2960
April 29, 1996
MEDIA ADVISORY
Meeting of Western Hemisphere Finance Ministers
Hosted by the United States of America
New Orleans
Friday, May 17, and Saturday, May 18, 1996
U.S. Treasury Secretary Robert Rubin will_chair a meeting of finance ministers from the
34 democratic countries in the Western Hemisphere in New Orleal1s on Friday, May 17,
and Saturday, May 18.
The following is a tentative press schedule -- for planning pursposes only -- and summary
of press arrangements for the meeting. Unless otherwise noted, all events are at Gallier
Hall, 545 S1. Charles Avenue.
This advisory will be updated.
Thursday, May 16
Press credentials available for pickup at the New Orleans Marriott,
555 Canal Street. (Time and location to be announced.)
Friday, May 17
9 a.m.
International Press Center opens at Gallier Hall.
2:30-5:30 p.m.
Financial Roundtable sponsored by the Inter-American
Development Bank. Participants will include a group of finance
ministers and private sector representatives from throughout the
Western Hemisphere.
Press: Open.
RR-I036
Far press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
DEPARTMENT OF THE TREASURY
WASHINGTON, D.C. 20220
Meeting of Western Hemisphere Finance Ministers
New Orleans, Louisiana
May 17-18, 1996
Ministerial Meeting
•
On May 17-18, Treasury Secretary Rubin will chair a meeting in New Orleans of finance
ministers from the 34 democratic countries in the western hemisphere.
•
Finance ministers will advance the initiative on Capital Markets Development and
Liberalization, announced by heads of government at the 1994 Summit of the Americas
in Miami.
•
The ministers will take concrete steps to strengthen and integrate financial and capital
markets so as to promote a more prosperous hcrllisphere and will discuss key economic
and fmancial issues for the region.
Summit of the A mericm
•
At the Summit of the Americas the heads of government recognized the importance of
regional integration to prosperity in the herllisphere. They noted that strong, integrated
financial and capital markets were essential to economic growth and development.
•
They created a Comrllittee on Hemispheric Financial Issues to:
promote the development and progressive integration of financial and capital
markets;
prepare a comprehensive list of national capital regulations to increase
transparency;
support the endeavors of the regional a.ssociations of bank and securities
regulators;
review the remaining problems of debt in the region.
Committee on Hemispheric Financial Issues
•
The meeting in New Orleans will be the first meeting of the Committee at the ministerial
level.
•
The Committee has met at the deputy level under U.S. leadership to advance a vision for
strengthening and integrating financial and capital markets consistent with the goal of
regional integration. It has developed for ministerial consideration initiatives to promote
this goal.
•
The Committee has drafted a survey of national capital regulations. A comprehensive
report of the results should be available later this year.
•
The Committee has also reviewed the remaining debt problems for the region and
identified issues that need close attention.
6-7 p.m.
Saturday. May 18
9:30 a.m.
-12:35 p.m.
Reception hosted by the City of New Orleans and Lousiana officials.
This will include brief remarks by local officials and Secretary
Rubin.
Press: Open to credentialed press; risers for cameras.
Louff.,:
Nt/sell", , /
A,J..
Plenary session.
Press: Photo spray at noon (time approximate).
Cameras will be escorted from International Press Center at 11:30
a.m.
12:40 p.m.
Group photo of finance ministers.
Press: Open.
4 p.m.
Concluding press conference.
5-7 p.m.
Reception hosted by World Trade Center and other New Orleans
business groups.
Location: World Trade Center, 2 Canal Street.
Press: Open to credentialed press; risers for cameras.
8 p.m.
International Press Center closes.
Credentials. Press credentials are required for all media covering the meeting. An
application for press credentials is attached.
U.S. press based in the United States should apply for credentials through the Treasury
Public Affairs Office. International press based in the United States should apply
through the U.S. Information Agency's Foreign Press Center in Washington. Press based
in countries other than the United States should apply through the USIA office in that
country.
International Press Center. The International Press Center will be open from 9 a.m.
Friday, May 17, until 8 p.m. Saturday, May 18, at Gallier Hall, ground floor. The press
center, open to credentialed reporters will make available official schedules, press
releases, information on events open to press coverage, transcripts and background
information.
The press center will have a limited number of international credit and calling card
telephone lines. Reporters wishing to reserve space and a dedicated telephone line in
the press center should contact the Treasury Public Affairs Office at (202) 622-2960.
Accomodations. A limited number of rooms will be available for credentialed press at
the New Orleans Marriott Hotel; for budget planning purposes, room rates are $99 per
room per night, not including taxes. Press wishing to reserve rooms at the Marriott
should return the attached form as soon as possible. New Orleans has many hotels in all
price ranges, although May is a popular time for the city and available rooms are
limited. The New Orleans Metropolitan Convention and Visitors Bureau at (504) 5665005 can help secure rooms.
Contacts.
U.S. Treasury/Washington
Chris Peacock, Michelle Smith or Phyllis Kayson at (202) 622-2960, fax: (202) 622-1999
U.S. Information Agency/Foreign Press Center
Arthur Green at (202) 724-0049, fax: (202) 724-0007
Peter Brennan at (202) 622-2854
-30-
WESTERN HEMISPHERIC FINANCE MINISTERS MEETING
New Orleans, Louisiana
May 17-18, 1996
Application for press credentials
(Please print or type)
All members of the press wishing to cover the Western Hemispheric Finance Ministers
meeting must submit a completed credential application form by Wednesday, May 1, 1996.
tlrst
Last name
middle
Press organization/affiliation
title
Business address (in home country)
Office phone number
FAX number
Date of birth
place of birth
Social Security number
u.s.
E-Mail
passport number
nationality
news organizations in the U.S. should apply for credentials through:
Phyllis Kayson
U. S Department of the Treasury
Office of Public Affairs, Room 2315 MT
1500 Pennsylvania Ave., N.W.
Washington, D.C. 20220
Phone:
(202) 622-2960; fax (202) 622-1999
Foreign news organizations based in the U.S. should apply for credentials through:
Arthur Green
USIA Foreign Press Center, Room 898
National Press Building
Washington, D.C. 20045
Phone:
(202) 724-0049; fax (202) 724-0007
All overseas press, whether affiliated with a U.S. or foreign news organization, should apply for credentials
through the U.S. Information Service in that country.
Credential pickup will be in New Orleans. Date and location to be announced.
Please FAX to:
Phyllis Kayson
Department of the Treasury
202/622-1999
MARRIOTT HOTEL REGISTRATION FORM
FOR WESTERN HEMISPHERIC FINANCE MINISTERS MEETING
Reservations must be made ASAP
Cancellations made no later than May 13 will incur no costs
-
NAME
COMPANY
ADDRESS
!
I
il
*
I
TYPE OF
ROOM*
I
FORM OF
PAYMENT
**
I
CHECK-IN
DATE
(approx.
time)
I
CHECK-OUT
DATE (must
be out by
noon)
I
I
I
Hotel accommodations and prices (do not include 11 % tax nor $3.00 per night city tax) are the following:
If space is available:
Single room for US $99.00. Indicate above with the letter R.
Double room for US $ 99 .00. Indicate above with the letter D.
* * Form of payment may be electronic transfer, charge card, cash, check, money order or traveler's checks.
In addition to the hotel rooms that have been arranged for you, do you wish to receive information about dedicated phone lines and work spaCf
in the press center at Gallier Hall?
Please provide your fax
and phone
number.
PUBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
FOR IMMEDIATE RELEASE
April 29, 1996
Contact: Peter Hollenbach
(202) 219-3302
u.s. TREASURY DEPARTMENT'S BUREAU OF THE PUBLIC DEBT
NOW OFFERS INVESTOR INFORMATION ON AMERICA ONLINE
The U.S. Treasury's Bureau of the Public Debt and America Online, Inc., announced today
that information about U.S. Treasury securities is now available online to America Online's
more than 5 million members. Public Debt and AOL launched the "U.S. Treasury
Securities" online area to offer convenient access to information about U.S. Savings Bonds
and the Bureau's popular TREASURY DIRECT program. The size of the United States
public debt, down to the penny, is posted daily. AOL members can access the information
via keywords: Savings Bonds or Public Debt.
"Today, 55 million Americans own savings bonds and AOL offers us a direct channel to
reach millions of our investors," said Richard Gregg, Commissioner of the Bureau of the
Public Debt. "When the Bureau looked to the online industry, America Online offered the
ideal resource for us to reach Americans interested in investing in U.S. Savings Bonds.
Working together, AOL and Public Debt created the easy-to-use U.S. Treasury Securities
area in AOL's Personal Finance channel to foster the Bureau's customer service goals."
"We are delighted that the U.S. Treasury Department, the first Federal agency to create an
online area within America Online, has chosen to deliver its infortnation and services
through this medium," said Ted Leonsis, President of America Online Services Company.
"Now investors or those curious about America's most widely held security, U.S. Savings
Bonds, can access an extensive menu of information about bonds with the click of a mouse."
AOL members can find out where to buy and redeem bonds, what bonds are earning, get
helpful investor information about a wide variety of bond service transactions and even
download a free program to keep track of their bonds. Investors can also e-mail one of
Public Debt's savings bonds experts if they have questions or need specific information
about their bonds. A message board is provided so members can "talk about savings bonds.
ll
Those interested in marketable Treasury Bills, Notes, and Bonds will find information about
TREASURY DIRECT. TREASURY DIRECT is a book-entry system that allows investors
to buy these marketable securities at auction and hold them in accounts directly with Public
Debt. Members also have access to the message board and e-mail and can access sale dates
for bills, notes, and bonds as well as the results of these auctions.
000
PA-218
(RR-1037 )
UBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
FOR IMMEDIATE RELEASE
April 29, 1996
CONTACT: Office of Financing
202-219-3350
RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
Tenders for $13,530 million of 13~week bills to be issued
May 2, 1996 and to mature August 1, 1996 were
accepted today (CUSIP: 9127943B8).
RANGE OF ACCEPTED
COMPETITIVE BIDS:
Low
High
Average
Discount
Rate
4.98%
5.00%
5.00%
Investment
Rate
5.11%
5.13%
5.13%
Price
98.741
98.736
98.736
Tenders at the high discount rate were allotted 72%.
The investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
TOTALS
Received
$49,910,779
Accepted
$13,529,629
$44,987,740
1,413,124
$46,400,864
$8,606,590
1,413,124
$10,019,714
3,295,115
3,295,115
214,800
$49,910,779
214,800
$13,529,629
Type
Competitive
Noncompetitive
Subtotal, Public
Federal Reserve
Foreign Official
Institutions
TOTALS
4.99 -- 98.739
RR-I038
UBLIC DEBT NEWS
Department of the Treasury • Bureau of the Public Debt • Washington, DC 20239
FOR IMMEDIATE RELEASE
April 29, 1996
CONTACT: Office of Financing
202-219-3350
RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
Tenders for $13,619 million of 26-week bills to be issued
May 2, 1996 and to mature October 31, 1996 were
accepted today (CUSIP: 9127943M4).
RANGE OF ACCEPTED
COMPETITIVE BIDS:
Low
High
Average
Discount
Rate
5.06%
5.08%
5.08%
Investment
Rate
5.26%
5.29%
5.29%
Price
97.442
97.432
97.432
$10,000 was accepted at lower yields.
Tenders at the high discount rate were allotted 49%.
The investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
TOTALS
Type
Competitive
Noncompetitive
Subtotal, Public
Federal Reserve
Foreign Official
Institutions
TOTALS
5.05 -- 97.447
RR-I039
Received
$49,878,244
Accepted
$13,619,444
$42,287,090
1. 228.754
$43,515,844
$6,028,290
1. 228.754
$7,257,044
3,300,000
3,300,000
3,062.400
$49,878,244
3,062.400
$13,619,444
5.07 -- 97.437
DEPARTMENT
OF
THE
TREASURY
NEWS
OFFlCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASIllNGTON, D.C .• 20220 • (202) 622-2960
FOR RELEASE AT 3 PM EDT
April 29, 1996
Contact: Hamilton Dix
(202) 622-2960
TREASURY ANNOUNCES MARKET BORROWING ESTIMATES
The Treasury Department announced on Monday that its net market borrowing for the
April - June 1996 quarter is estimated to be a pay down of $20.0 billion, with a cash balance
of $35 billion on June 30. These estimates do not include new cash to be raised in the June
2-year and 5-year notes, which will settle on July 1, 1996. The Treasury also announced that
its net market borrowing for the July - September 1996 quarter is estimated to be in the
rangeof $55.0 billion to $60.0 billion, with a cash balance of $40 billion on September 30,
1996.
In the quarterly announcement of its borrowing needs on January 29, 1996, the Treasury
estimated net market borrowing for the April - June quarter to be in a range of $0 billion to
$5 billion, assuming a $35 billion cash balance on June 30. The current estimate reflects an
increase in receipts, especially individual income taxes, and a decrease in outlays.
Actual net market borrowing in the January - March quarter was $77.2 billion, while the
end-of-quarter cash balance was $21.9 billion. On January 29, the Treasury estimated net
market borrowing for the January - March quarter to be $85.3 billion, with a $20.0 billion
cash balance on March 31. The difference in net market borrowing was the result of both
higher receipts and lower outlays.
The regular quarterly refunding press conference will be held at 1p.m. EDT on
Wednesday, May 1, 1996.
-30-
RR-I040
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-204.0
TREASURY FINANCING REQUIREMENTS
January - March 1996
$Bil. r----------------.::...-.:..:..:::.:.~.:..::-=----------~ $Bil.
Uses
200
200
150
150
State and
Local
•
100
100
8
50
•
Deficit'y
,Y Includes budget deficit, changes in accrued interest and checks
o
outstanding and minor miscellaneous debt transactions.
Department 01 the Tr98sury
Apnl 29, 1996-1
Office 01 Maric:et Roanca
TREASURY FINANCING REQUIREMENTS
April - June 1996
$Bil.r-------------~-----.--------------.$Bil.
Uses
Sources
157';.
150
150
•
100
50
Increase
in Cash
Net
Market
Paydown
•
Coupon Refunding
100
Savings
Bonds
State and
Local
•
50
.,_.2.%.4_
Balance,Y . •
I
o
,Y Assumes a $35 billion cash balance June 3D,
1996.
!; Includes budget deficit, changes in accrued interest and checks
outstanding and minor miscellaneous debt transactions.
Department 01 the Treasury
OffIce 01 Market Anance
Aprtl29, 1996-2
TREASURY OPERATING CASH BALANCE
Semi- Monthly
$Bil.r---------------.:.----------r---60
Without
=;J
New
Borrowingy
Total Operating
Balance
•
40
20
o~------------------Federal Reserve Account
I
I
I
I
I
I
~
~
~
,
-20
I
I
•
I
I
•
I
_40
I
• I
II
I
_60~--~--~--~~--~--~--~--~---L--~---L--~--~--~--~
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
1995
Mar Apr
May
Jun
1996
y Assumes refunding of maturing issues.
Department of the Treasury
AprlI29,199&3
Office of Market Finance
TREASURY NET MARKET BORROWING y'
$BiI . .---------------------------------------------------,~;Ril.
Coupons
EZl Over 10 yrs.
100
[ ] 5 - 10 yrs. Y
~ 2 - under 5 yrs
•
Bills
60
40
20
o
-20
-20
_40L------------L----------~~--~~~~~~--~~--~~~-40
II
III
1992
OeparfrMntotthEi Trea.8l.Iry
Office of Market Arence
IV
J.I
Y
II
III
1993
IV
II
III
1994
IV
II
III
1995
IV
I
1996
Excludes Federal Reserve and Govemment Account Transactions.
7 year note discontinued after April 1993.
AprlI29,1996-4
NET MARKET BORROWING
April - June 1996
(Billions of Dollars)
Total
-20.0
Done.!!
-35.0
Bills
Regular weekly
52 week
Cash management
-5.9
2.9
-38.3
Notes
2 year notes
5 year notes
7 year note
4.9
9.1
-7.8
To Be Done
15.0
Jj Issued or announced through April 26, 1995.
Department of Treasut)'
otficB of Market Finance
April 29, 1996-4a
NET NEW CASH FROM NONCOMPETITIVE TENDERS IN
WEEKLY BILL AUCTIONS 11
$Mil..----------------------------Net New Cash (left scale)
200
6.0
Discount Rate (right scale)
D 26 week
••••••• 26 week
•
-
13 week
Discount Rate %
13week
5.5
100
5.0
-100
-200
-300
-400
lLi...LL.i...L...L..L..lLL..LL.ilL.L.L...LLLLL.U..L.LLLlI-L.l-Lll....J......l.....J......l..LJ.....J......I-I....L-I-..J.....L.JLL.L.Ll.l..l.-L...l...-Ul.-L-J.....J--L.I
Apr
May
Jun
Jul
Aug
Sep
Oct
1995
Nov
Dec
Jan
Feb
Mar
Apr
P
1996
'1/ Excludes noncompetitive tenders from foreign official accounts and the Federal Reserve account.
Department of the Treasury
Offtce of Market Finance
p Preliminary
April 29, 1996-5
NONCOMPETITIVE TENDERS IN TREASURY NOTES AND BONDS Y
$Bil
3.5
$Bil.
®~;;;:12 & 5 Year
,--
-
3.5
-
3.0
2.5 -
-
2.5
2.0 -
-
2.0
II1II3, 10 & 30 Year
3.0
1.5
c-
1.5
I-
1.0 -
1.0
0.5 -
0.5
o
M J
J
11
J
A S 0
N D
1994
J
F M A M J
J
A S 0
N D
1995
J
F M I\P
1996
o
Excludes foreign add-ons from nonoompetitive tenders. From October 18, 1995 to April 1, 1996, foreign add-ons were prohibited
p Preliminary
to avoid exceeding the debt limit, foreign rollovers were excluded from nonoompetitive tenders.
Treasury increased the maximum nonoompetitive award to any nonoompetitive bidder to $5 million effective November 5,1991.
Effective February 11, 1992, a nonoompetitOie bidder may not hold a position in WI trading, futures, or forward oontracts,
nor submit both competitive and noncompetitive bids for its own account.
Dopwtment ot the Treasury
April 29, 1996-6
Office of Market Rnance
NET STRIPS OUTSTANDING (1985-1996)*
$Bil..-------------------------------,
1985
1986
1987
1988
End of Quarter
'Strips program began February 15, 1985.
Reconstitution began May 1, 1987.
Department of the Treasury
0tfIce of Market Finance
April 29, 1996-66
SECURITIES HELD IN STRIPS FORM 1994-1996
Privately Held
$
$Bil.
80
Strippable
Stripped
II
As of April 30, 1994: $721.1 billion, $221.2 billion
~
As of April 30, 1995: $777.1 billion, $227.1 billion
II
As of April 19, 1996: $823.9 billion, $227.0 billion
80
60
60
40
40
20
20
o
Less than 5 years
5·10 years
10-15 years
15-20 years
20-25 years
25-30 years
o
Years Remaining to Maturity
Note: The STRIPS program was established in February 1985. The 115/8% note of November IS,
, 994, issued on November 15, 1984, was the first STRIPS-eligible security to mature.
Department of the Tr&asUry
Office of Market Rnance
April 29. 1996-7
SECURITIES HELD IN STRIPS FORM 1994-1996
Percent of Privately Held
0/0 ~-----------------------------------------------------------------,%
II
60
As of April 30, 1994
60
~ As of April 30, 1995
II
As of April 19, 1996
40
40
20
20
o
Less than 5 years
5-10 years
10-15 years
15-20 years
20-25 years
25-30 years
o
Years Remaining to Maturity
Note: The STRIPS program was established in February 1985. The" 5/8% note of November IS,
1994, issued on November 15, 1984, was the firs! STRIPS-eligible security to mature.
Department ot the Treasury
of ~arket Fir1ance
~
April 29, 199&8
TREASURY NET BORROWING FROM NONMARKETABLE ISSUES
$BiI.
8
$BiI.
7.8
3.5
8
6
6
4
4
2
2
0
0
-2
-2
-4
-4
-6
-6
Savings Bonds
-8
-8
State and Local Series
-10
II Foreign Series
-12
-10
-8.9
-12
-14
-14
II
III
1992
IV
II
III
1993
IV
II
III
IV
1994
II
III
IV
1995
I
II e
1996
e estimate
Ot;i~rtl"nEImQftheTl'$MIJry
OffIce 01 Market Rnance
AprIl 29, 1996-9
SALES OF UNITED STATES SAVINGS BONDS
o~~~~~~~wu~~~~~~~~~u.~.u~u.~.u.
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991
End of Quarter
e estimate
Departrn.nt of the rr8Uury
Office of Market Anance
AprIl 29, 1996-10
STATE & LOCAL GOVERNMENT SERIES
.
• •..
-.
.
: ••..• •.
$Bil.r---------------------------------,$Bil.
.~
.• •
•
~.
••
10
..
.....:.• . ;..
•••••
••
••
••
~.
5
10
5
$B~.~==:::==============:::=====~~$~il.
0~~--~--------~~~--~~----------------------------_40
-5
-5
II
III
1992
IV
II
III
1993
II
III
1994
IV
II
III
1995
IV
IV
I
1996
e, 1995 to March 29, 1996.
Note: SLGS sales were suspended from October 1
Department 01 tha Treasury
April 29. 1996-11
0tfIc:e of Mat1<et Flnanee
STATE AND LOCAL MATURITIES 1996-1998
$Bil..-------------------------------$Bil.
7.3
4
2
2
0
Department of tne Treasury
Office 01 Marke1 FlI'1~(:8
II
III
1996
IV
III
II
1997
IV
II
III
IV
0
199B
AprtI29,199&12
QUARTERLY CHANGES IN FOREIGN AND INTERNATIONAL
HOLDINGS OF PUBLIC DEBT SECURITIES
$BiI.
$BiI.
Nonmarketable
D
70
70
Marketable
60
60
~ Net Auction Awards to Foreign 1/
•
50
Other Transactions
50
40
40
31.6
30
30
20
20
10
10
0
0
-10
-10
-20
II
III
IV
II
1992
Y
Y
Dopartmont
III
IV
1993
II
III
1994
IV
II
III
IV
1995
Auction awards to foreign official purchasers netted against holdings of maturing securities.
Data through February 29, 1996.
at the Treasury
othce 01 Market Anance
April 29. 1996-13
FOREIGN HOLDINGS AS A PERCENT OF TOTAL
PRIVATELY HELD PUBLIC DEBT
Percent - - - - - - - - - - - - - - - - - - - - - - - - Percent
26
26
24
24
22
22
20
20
18
18
16
16
14
1985
1986
1987
1988
1989
Quarterly
Department of the Tr688Ury
Offioe 01 Market Anance
April2Q, HIQ6-14
MAJOR FOREIGN HOLDERS OF TREASURY SECURITIES
Country
Japan
December 31, 1994
December 31,1995
I ABa%of IASa%Of
$ Billions
Total
Total
Foreign
Private
IASa%Of I,AB8%Of
$ Billions
Total
Total
Foreign ! Private
February 29, 1996
;IAa8%of IAS8%Of
Total
Total
Foreign
Private
$ Billions
$175.7
25.5%
5.5%
$219.9
25.5%
6.7%
$242.5
26.4%
7.2%
United Kingdom
91.0
13.2%
2.9%
123.6
14.3%
3.8%
127.5
13.9%
3.8%
Germany
54.4
7.9%
1.7%
53.7
6.2%
1.6%
58.2
6.3%
1.7%
Netherland Antilles
27.6
4.0%
0.9%
50.9
5.9%
1.5%
38.7
4.2%
1.2%
Switzerland
32.4
4.7%
1.0%
37.0
4.3%
1.1%
35.4
3.9%
1.1%
Singapore
21.9
3.2%
0.7%
29.7
3.4%
0.9%
39.3
4.3%
1.2%
Mainland China
20.5
3.0%
0.6%
34.9
4.0%
1.1%
22.9
2.5%
0.7%
OPEC
25.6
3.7%
0.8%
28.0
3.2%
0.8%
28.1
3.1%
0.8%
24.6
3.6%
0.8%
25.1
2.9%
0.8%
29.0
3.2%
0.9%
Taiwan
25.8
3.7%
0.8%
24.0
2.8%
0.7%
36.0
3.9%
1.1%
Spain
27.9
4.1%
0.9%
19.3
2.2%
0.6%
21.6
2.4%
0.6%
Hong Kong
13.8
2.0%
0.4%
18.8
2.2%
0.6%
21.7
2.4%
0.6%
7.9
1.1%
0.2%
16.4
1.9%
0.5%
17.3
1.9%
0.5%
13.1
1.9%
0.4%
12.7
1.5%
0.4%
12.8
1.4%
0.4%
9.7
1.4%
0.3%
9.2
1.1%
0.3%
11.0
1.2%
0.3%
Other
116.7
16.9%
3.7%
158.6
18.4%
4.8%
175.9
19.2%
5.3%
Estimated
Foreign Total
688.6
100.0%
21.7%
861.8
100.0%
26.2%
917.9
100.0%
27.4%
I
Canada
I
Mexico
Belgium
France
:
Note: RP's are included in "othe(. Detail may not add to totals due to rounding.
Department at th~ Trll;lMlJry
OffIG8 of Market Finance
Source: Treasury Foreign Portfolio Investment Survey benchmark as of end-year 1989
and monthly data collected under the Treasury International Capital reporting
system.
April 29, 1996-15
NET AWARDS TO FOREIGN OFFICIAL ACCOUNTS Y
$Bil. . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ; 9 : - : . 3 ; : - - - - - - - '$BiI.
10
10
8.8 6.4
3.9
6.1
4.7
62
o
.
3.8
6.0
3.6
3.0
4.5
5
5
o
,
0
....
-0.8
...
-5
-4.2
-0.8_,.0
-5
-1.0
-10
-10
-15
-15
-20
Notes
I:::::::::::j
-25
-20
-18.6
~ 5 years and over
2-3 years
Bills
-25
-23.7
-30L-~~I~I~I~II-I~V~~~II~III...IV,L~~II~II'I"IV~--~I~I'I~IIII~V---'-"11-"11'1T,IV~-'12y~-30
1991
1992
1993
Quarterly Totals
1994
1995
1996
.v Noncompetibve awards to foreign official accounts held in custody at the Federal Reserve in
Department of the Treasury
OffIce of Market Finance
excess of foreign custody account holdings of maturing securities. Foreign add-ons prohibited
from October 18,1995 to March 29,1996 to avoid exceeding the debt limit.
y Through April 26, 1996.
AprIl 29. 1995-16
SHORT TERM INTEREST RATES
Quarterly Averages
%r-----------------------------~--~~----------------------~%
10
10
8
6
6
3 Month
Treasury Bill
4
1985
1986
4
1987
1988
1989
1990
1991
1992
1993
1994
1995
Departmenl of the Treasury
Office of Mart<et Finance
1996
January 29, 199&17
SHORT TERM INTEREST RATES
Weekly Averages
%~-------------------------------------------------------------,%
9
9
•
Prime Rate
8
8
Through
7
April 24
1
Commercial
Paper
•
6
......
6
~
'= •
5
7
- -•
~
5
"-
3 Month
Treasury Bill
4
4
Jul
Aug
Sep
1995
Oct
Nov
Dec
Jan
Feb
Mar
Apr
1996
Department of the Treasury
Office of Market Rnance
Aprll2Q,1996-1e
LONG TERM MARKET RATES
Quarterly Averages
o/r-------------------------------~----~--------------------------_,%
12
12
11
11
New Aa Corporates
•
10
10
Through
April 24
9
-------
8
7
---
--------
!
9
8
7
6
6
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
Department of the Treuory
Apr1129,1996-19
Office rJf Market Rnance
INTERMEDIATE TERM INTEREST RATES
Weekly Averages'
%.-----------------------------------------------------------------, 0/0
FHLMC 30-Year
,. +
8
....
Conventional
I ~
8
,. -",
,-,;
..
," ,
.............
Through
April 24
,
<If'
-
'
__ ,
,
"-'"
7
'" .... _-"
,
,
.. ,
7
6
6
I
I
5LL~~U-~~~~~~~~~~~~~~~~~~~~~~~~~
Jul
Aug
Sep
Oct
Nov
5
1995
• Salomon 10-yr. AA Industrial is a Thursday rate.
0epar1rnen1 of th& Treasury
otftce or Market Ananc:e
April 29, 1996-20
MARKET YIELDS ON GOVERNMENTS
%r-----~----~----~----._----._----._----~----~----~----%
6.5
6.5
6.0
6.0
5.5
5.5
I--r----.-~--...__J..,-___._~L-...__~L.,
--r-r-r--+-~J....J
•
5.0
%
7.0
5.0
6.5
January 29, 1996
4.5
4.5
4.0 '--____"'--____"'--____"'--____.l--____.l--____.l--____.l--____I...-____I...-__----J 4.0
o
2
3
4
5
6
7
8
9
10
Years to Maturity
Department of the Treuury
OffIce of MllI1c:et FlnBJ"lOO
Aprl129. 1996-21
PRIVATE HOLDINGS OF TREASURY MARKETABLE DEBT
BY MATURITY
$BiI. r------------=:.....:......:..:..:..:.....:...:.......::....:....:.;;....;...-=---------------,
3000
2500
D
Over 10 years
~
2-10 years
~
1-2 years
-
2000
II
1500
1 year & under
Bills
1000
500
o
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
As of December 31
Department of the TreuUrf
OffIce of Market Finance
April 29. 1996-22
PRIVATE HOLDINGS OF TREASURY MARKETABLE DEBT
Percent Distribution
Coupons
0 Over 10 years
D 2-10 years
[3
1-2 years
II
1 year & under
•
Bills
100%
14
80
60
40
20
o
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995 Mar '96
As of December 31
Depat1rnent at tt1e Treaaury
April 29, 1996-23
O1'/1ce 01 MBr1<et Rnance
AVERAGE LENGTH OF THE MARKETABLE DEBT
Privately Held
years------------------------------------------------------~
~
10
June 1947
10 Years
5 Months
Months
March 31, 1996
5 Years, 2 Months
66
9
8
7
I
64
62
J
F M A M J
J
A SON
D
6
5
December 1975
2 Years
5 Months
4
3
2LLLLLL~~~~U_LLLL~~~~~~~~WLWL~LL~~~~~
194547 49 51 53 55 57 59 61 63 65 67 69 71 7375 77 79 81 83 85 87 89 91 93 95
Department of the Treaaury
Office of Marke1 Finance
April 29, 1996-24
MATURING COUPON ISSUES
May - Septem ber 1996
(in millions of dollars)
March 31, 1996
Held by
Maturing Coupons
7 3/8%
41/4%
75/8%
5 7/8%
77/8%
%
6
77/8%
77/8%
6118%
43/8%
8
%
71/4%
61/4%
7
%
6112%
Note
Note
Note
Note
Note
Note
Note
Note
Note
Note
Bond
Note
Note
Note
Note
05/15/96
05/15/96
05/31/96
05/31/96
06/30/96
06/30/96
07/15/96
07/31/96
07/31/96
08/15/96
08/15/96 -0121
08/31/96
08/31/96
09/30/96
09/30/96
Totals
Y
Y
Total
Federal Reserve
& Government
Accounts
Private
Investors
Foreign.!!
Investors
20,086
19,264
9,617
18,927
9,770
19,859
7,725
9,869
19,416
20,670
1,485
9,825
19,292
10,088
19,639
2,074
2,228
393
753
412
1,765
721
270
1,247
3,074
758
499
810
381
1,200
18,012
17,036
9,224
18,174
9,358
18,094
7,004
9,599
18,169
17,596
727
9,326
18,482
9,707
18,439
275
1,904
697
2,628
207
3,603
170
260
3,006
2,257
0
685
4,088
395
3,151
215,532
16,585
198,947
23,324
F.R.B. custody accounts for foreign official institutions; included in Private Investors.
On April 11 , Treasury announced the call for redemption at par on August 15, 1996, the 8%
1996-01, dated August 16,1996, due August 15, 2001.
Department of1he Treasury
Office of Market Rnanee
April 29, 1996-25
TREASURY MARKETABLE MATURITIES
Privately held, Excluding Bills
38
36
34
32
30
28
26
24
22
20
18
16
14
12
10
8
6
4
~~~~~~~~~~~~~~~~~~~~~~~~==~~~~~==~~~
38
36
34
32
30
28
26
24
22
20
18
16
14
12
10
8
6
4
2
o
J
M
F
_
A
M
Securities issued prior to 1994
III New issues calendar year 1994
J
J
A
s
o
N
~ New issues calendar year 1995
o
Issued or announced through April 26, 1996
Depar1ment of the Treasury
ortice 01 Market Rnance
AprIl 29. 199&-26
TREASURY MARKETABLE MATURITIES
SBii.
1==""::::-::-_---;;:;;:;:;-;;;;:;;::;;-;_~;;;;;;:__--,_pr-iv-a...:..te::....ly~he:.:l.:;:.d, Excluding Bills
30.0
1998
29.5
:
~
~~
27.6
u-
/
M
~
=
=
SBill=-::--......:;--.----2-0-0-2----,------n
287
I1
M-
~
16
21.7
18
16
r14
r12 I-
18
20 I-
1~·
12
10
12.4
10
10 I8r6r-
8
6
4
~
~~
10.7
~
:.:
~=~==;:=~~====~==~=~~=~
32 r2003
3Or-
28
26
34
M
:
&
27.5
~I-
=~ ~
1416
12
1-1
20 I-
18
16
12
& r-
10
8
rMIr10 r-
6
4
2
1
61~~
68
.
B r-
o~~~~~~~~~~~~~~~~~~~=
ii
..
o~~==~====~======~==~==~==~
~~
2004
3OrI-
28
~~~~~~~~~~~~~~~~~~~~~~~=~
~~
2001
'2.0 '2 ·Q2.0
12.7
,
,.3:0 3.1
'1'"
J
F
M
A
20118 rrI12 flO -
16
14
12.7
1 1
M
Deparlment of the Treasury
J
J
A
~
15.7
16.4
12.4
a-
642-
SON
...
o
o~--~----~----~--~----~----~----~--
o
J
FMAMJ
•
Securities issued prior to 1994
~ New issues calendar year 1995
•
New issues calendar year 1994
D
JASON
Issued or announced through April 26, 1996
Apnl 29, 1996-27
Office of M8Iket Anenc::e
TREASURY MARKETABLE MATURITIES
Privately held, Excluding Bills
$Bi I.
24 -~
16 -14 -
127
12
10 r8 l6 f-
4 r-
2
o
I-
20 r18 l16
I-
14 r-
2005
18.8
20 18 -
/
[8
$B~IEc:::-----"---.---:-.-:-4-2-0-1-4--:.7.3----r--j;;-;.8;-----;n
21.9
~
13.5
~!20=
:===1=,,=·3=:;:==~=2=01=5=~:::;==~==~
E_
I
I
I
il~~
I ~17'B~12T~"'I~
ii
2006
'.'
12 r10 ~
8 ~
6 '-
4
2
--
o
~ f--
~E
•
!
.27
u
1.1
=
I
i!~
"'12T I
o:=======*==~==~==~==~======~
I
'i~
20j18
o
-
2019
18.8
187
-
J
Department of the TrQasury
OffICe of MIlIflle1 Finance
•
Securities issued prior to 1994
•
New issues calendar year 1994
F
M
A
M
J
J
A
S
o
N
o
~ New issues calendar year 1995
o
Issued or announced through April 26. 1996
April 29, 1996-28
TREASURY MARKETABLE MATURITIES
Privately held, Excluding Bills
$8il.r-----T"-----------,----=~-..;
~~
2020
20.7
ir-
22
20
20'18 ' -
2021
32.0
--
2024
:lg
20
18
16
119
11.5
14
12
10
8
42-
6
4
~~~~~~==~~~~~~~~~~~
24 r22r-
2022
2Or18 r16 r14 r12 r10 r8r6r4r2r-
10.2
I"
I
Department of the Treasury
Office at Market Finance
Securities issued prior to 1994
_
New issues calendar year 1994
-
2025
-
~5
110
/
2 r-
o
222018 16 14 12 10 8-
2026
12.0
6-
42-
O~--~----~--------~--~L---~--~~--~ o
J F M A M J J A S 0 N 0
_
I " II
I
o
10.7
21.9
8 '-
6
4
2
O~~~~~~~~~~~~==~ o
16 14 12 10 86-
2023
17_4
rr-
I
: ~
32 r3Or28 r26r24 r22r2Or18 r-
rr-
18 r16 r14
12
10 r-
16 14 -
Hi
$8
J
F
M A M J
J
A SON
0
~ New issues calendar year 1995
o
Issued or announced through April 26, 1996
April 29, 11196.. 2£1
DEPARTl\lENT
OF
THE
TREASURY
NEWS
omCE OF PUBIlC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASlllNGTON, D.C. - 20220 - (202) 622-2960
FOR IMMEDIATE RELEASE
Text as Prepared for Delivery
REGULATORY STRUCTURE FOR
FDIC-INSURED DEPOSITORY INSTITUTIONS
Testimony of John D. Hawke, Jr.
Under Secretary of the Treasury for Domestic Finance
Before the
Committee on Banking and Financial Services
United States House of Representatives
April 30, 1996
Mr. Chairman, Congressman Gonzalez, Members of the Committee. I
appreciate this opportunity to discuss the Administration's views on the appropriate
regulatory structure for FDIC-insured depository institutions.
In my testimony today, I will cover three key areas. First, I will briefly
describe the current regulatory system and some of its problems. Second, I will
discuss how the current system could be made more rational, in line with a proposal
the Administration developed during the l03rd Congress. And third, I will talk about
current proposals for eliminating the thrift charter, advanced in the context of
legislation to cure the problems of the Savings Association Insurance Fund, and their
implications for the Treasury's Office of Thrift Supervision (OTS).
I.
The Current System
Today, four different federal agencies regulate and supervise depository
institutions insured by the Federal Deposit Insurance Corporation (FDIC). The Office
of the Comptroller of the Currency (OCC) charters, regulates, and supervises national
banks. The Board of Governors of the Federal Reserve System regulates and
RR-I041
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
2
supervises bank holding companies and state-chartered banks that are members of the
Federal Reserve System. The Federal Reserve, as well as the OCC, also has certain
responsibilities for regulating and supervising foreign banks' U.S. operations and U.S.
banks' foreign operations. The FDIC, in addition to insuring deposits, regulates and
supervises state-chartered banks that are not members of the Federal Reserve System.
The Office of Thrift Supervision charters, regulates, and supervises Federal savings
associations, and regulates and supervises savings and loan holding companies and
state-chartered savings associations.
No one seeking to design a bank regulatory system from scratch would replicate
the current agency structure, which is understandable only in the historical context in
which it evolved. It is highly complex -- so much so that even financial services
practitioners lose track of who regulates what. It often subjects banking organizations
to redundant demands, overlapping supervision, and on occasion even inconsistent
regulation by two, three, or even all four agencies. It creates impediments to
coordinating policies and regulations among the federal regulators, and can delay
decisionmaking.
In an effort to overcome some of these problems, the Administration has
encouraged the federal banking agencies to achieve better coordination and thereby
reduce the regulatory burdens on depository institutions. Over the past three years,
these efforts have met with considerable success.
ll.
A More Rational System
In your letter, Mr. Chairman, you asked for our suggestions on how Congress
could reform the regulatory structure.
In 1994, the Administration presented a concrete approach to such reform,
building on ideas that had emerged over the past half-century. That approach would
combine the regulatory and supervisory functions of the OCC, Federal Reserve,
FDIC, and OTS into a new independent agency -- the Federal Banking Commission,
having a five-member board that would include the Secretary of the Treasury, a
representative of the Federal Reserve Board, and three members appointed by the
President and confirmed by the Senate. The Commission would regulate and supervise
all federally insured banks and thrifts, all bank and thrift holding companies, U.S.
banks' foreign operations, and foreign banks' U.S. operations. The Commission
would also charter national banks and federal savings associations.
3
This simplified structure could improve efficiency, reduce costly duplication of
effort in the industry, ensure greater consistency in regulation, and benefit consumers,
businesses, and the economy.
I would note that regulatory consolidation has been discussed, studied, and
analyzed for at least fifty years. We recognize the complexities and controversies
involved in moving such a proposal forward and -- given the high priority items on
our financial institutions agenda, such as the recapitalization of the Savings
Association Insurance Fund, financial modernization, and regulatory burden relief -we are not recommending that this difficult issue be confronted again now. In
particular, given the ongoing developments -- and dramatic changes -- in the industry
today, we do not believe that this is an opportune time to seek enactment of such
legislation. If this subject is to be revisited, it should be deferred until we know with a
greater degree of certainty what the profile of the financial services industry will look
like over the next several years.
m.
The Thrift Charter and the Office of Thrift Supervision
A more immediate question involves the Office of Thrift Supervision. Congress
and the Administration have for almost a year been considering legislation to resolve
the problems of the Savings Association Insurance Fund (SAIF). Among other things,
this legislation would call for a merger of SAIF with the Bank Insurance Fund, a step
we strongly endorse. As this legislation passed the Congress last year, such a merger
of the funds would have been conditional on the elimination of the thrift charter. As
an adjunct to the SAIF legislation, serious consideration has been given to proposals to
merge thrift regulation with bank regulation and to regulate all thrifts as banks for all
federal regulatory purposes. We are actually dealing with a three-part process, which
includes:
•
resolving the SAIF's problems as soon as possible and merging the
FDIC's two insurance funds;
•
phasing out the thrift charter, with appropriate grandfather rules; and
•
making conforming changes in the regulatory structure.
A. Charter Conversion
Let me say at the outset that promoting affordable housing and home ownership
is one of this Administration's most important goals -- relating directly to efforts to
rehabilitate our cities, to stabilize inner-city neighborhoods, and to revitalize rural
4
communities. Over the course of its history, the thrift industry has made important
contributions toward meeting such objectives.
Having said that, however, we believe that in the context of resolving SAIF's
problems the time has come to unify our system of FDIC-insured depository
institutions. With SAIF rehabilitated, and in anticipation of a BIF-SAIF merger, we
no longer see a need for a separate thrift charter or a separate system of thrift
regulation. Thrifts and banks no longer differ as sharply as they did seven years ago,
much less twenty years ago. Indeed, the banking and thrift industries have, to a
significant degree, grown together. Thrifts meet capital and other regulatory standards
no less stringent than those applicable to banks. Along with mortgage companies,
banks have become major originators of home mortgages -- with a market share
exceeding that of thrifts. (According to HUD surveys, during the first half of 1995,
mortgage companies originated 55 percent of one-to-four family mortgages; banks
originated 25 percent; and thrifts originated 19 percent.) Thrifts have also diversified
into such non-housing lines of business as consumer lending and credit cards.
Thrifts no longer need a specialized charter or special federal tax treatment to
serve the interest of residential mortgage lending. Indeed, pending legislation to end
the special bad-debt reserve treatment that thrifts have enjoyed -- legislation that was
driven by the proposal to cure SAIF's problems and to merge the two funds -- would
remove a major reason for using the thrift charter. Thrifts could readily conduct a
home mortgage business using a national or state bank charter. We anticipate that a
great many thrifts would, even as banks, continue focusing on mortgage lending, and
we believe they should be permitted to carry on the kind of business they know best,
without facing arbitrary supervisory pressure to make their portfolios look just like
those of commercial banks. Just as the bank charter currently embraces a wide range
of institutions -- from small community banks to global money center banks -- so
thrifts should be free to specialize prudently within that charter.
By the same token, the spreads thrifts earn on residential mortgages have
narrowed dramatically, and such mortgages can expose thrifts to significant interestrate risk. Giving thrifts the option of diversifying their portfolios would tend to
enhance their stability and long-term viability.
We would facilitate conversions from thrift charters to bank charters and
abolish the federal thrift charter by a date certain. Federally chartered thrifts that did
not convert to bank charters would automatically become national banks. Statechartered thrifts that retained their existing charters would, for purposes of federal
banking law, be treated as state-chartered banks.
5
B. Agency Issues
Such a transformation in the thrift industry, energized by the enactment of
legislation resolving the problems of SAIF, would clearly have implications for the
structure of federal regulation. If the federal thrift charter were eliminated, we would
need to plan for the future of the Office of Thrift Supervision -- and, in particular, its
devoted and highly professional employees.
In offering suggestions on how the transition could best be managed, we seek
to:
•
be fair to the OTS's employees;
•
maintain safety and soundness;
•
avoid disrupting the OTS's operations; and
•
be mindful of the Administration's efforts to streamline operations and
increase workforce efficiency across the federal government.
Within this context, at least two general issues need to be addressed. First,
how would the OTS be managed between the enactment of thrift charter legislation
and the time the thrift charter ceases to exist? And second, what process would be
utilized to assist OTS employees find new employment?
1. Transition period
Any legislation eliminating the thrift charter should provide sufficient time to
wind down the OTS's operations without jeopardizing the OTS's ability to regulate
and supervise the industry, assure the agency's orderly operation during the transition,
and absorb OTS employees into the bank regulatory structure. This transition period
would correlate with the time period provided for phasing out the thrift charter.
During this period, thrifts would make decisions about the nature of the charter under
which they would operate going forward, and such decisions would affect the banking
agencies' staffing needs.
One could minimize disruption by temporarily retaining the OTS as a separate
agency during the transition period. The following approach would avoid such
disruption:
6
•
Repeal the statutory prohibition against consolidating functions of the
OCC and OTS. Departments normally have authority to consolidate
functions of their bureaus. Repeal would help to ensure that there would
be sufficient personnel to carry out thrift supervision responsibilities
between the enactment of thrift charter legislation and the abolition of the
thrift charter.
•
Assign the OTS Director's duties to the Comptroller of the Cu"ency.
The Comptroller would be responsible for running both bureaus as
separate agencies during the transition period -- accountable for both
agencies' safety and soundness missions.
•
Provide management flexibility through such means as cross-servicing
agreements. Such agreements between OCC and OTS would allow for
increased efficiencies at both bureaus, facilitate an orderly transition, and
reduce the potential for disruption, especially if the OTS faced significant
employee attrition.
At the conclusion of the transition period, OTS's separate existence would cease.
2. Employee status
Some fundamental decisions must be implemented with respect to the future of
the OTS staff if the OTS were to cease to exist. The employees of the OTS are
extremely talented, highly qualified individuals, and we are deeply committed to
helping them in any way that we can. In that respect, I would like to commend the
OTS's Acting Director, Jonathan Fiechter, for the outstanding job he has done
managing the OTS -- through times both good and bad for the thrift industry.
We have identified at least two possible alternatives for addressing OTS
employee issues if the OTS ceases to exist:
•
First, provide assistance to OTS employees in seeking employment in the
federal banking regulatory agencies or elsewhere in the public or private
sectors.
•
Alternatively, reassign OTS employees to one of the three federal
banking regulatory agencies, after thrifts have made their charter
choices, and then let those agencies decide on their ultimate staffing
needs.
7
These alternatives can be seen as defining a spectrum of choices, with one alternative
at each end of the spectrum. Certainly, there will be other viewpoints on this matter
and the final approach will surely be developed by considering many different
perspectives.
Under the first alternative, OTS employees would have a period of time -equal in length to the period afforded for thrift conversions -- within which to find
new employment. Eligible OTS employees would receive selection priority over other
applicants for positions that the federal banking agencies and the Treasury and its
bureaus might seek to fill. They would also receive selection priority for positions at
every other federal government agency over any applicant from outside the agency
(who is not otherwise subject to a selection priority program) or the private sector.
The second alternative would involve reassigning OTS employees to one of the
federal banking agencies no later than by the close of the transition period. Those
agencies would have a period of time to prepare for the integration of OTS
employees, and employees would be allocated among the agencies in some specified
proportion to thrifts' charter choices -- that is, their choices whether to operate as
national banks, state member banks, or state nonmember banks. The three federal
banking agencies would design and implement the reassignment process within a
statutorily mandated time frame, and former OTS employees would be fully integrated
into the receiving agencies, with credit for their prior service.
We believe that either of the two options I have described would be a
reasonable model, and there may certainly be other variations worthy of consideration.
The Treasury is not making a recommendation at this time as to a preferred course.
We would, however, be pleased to work with the Committee in further developing
these or other options on the spectrum.
As we consider these agency issues, we should proceed with appropriate
sensitivity and caution. Agency employees understandably have considerable anxiety
over their future prospects. Discussing possibilities in detail before a SAIF solution is
enacted and before resolving the charter issues (and thereby gaining confidence about
how to resolve the agency issues) could create needless anxiety and disruption.
IV.
Conclusion
In conclusion, Mr. Chairman, I would emphasize that this is not a propitious
time to embark on a major reorganization or consolidation of the federal bank
regulatory agencies.
8
Yet the SAIF legislation presents us with an opportunity to address the future of
the thrift charter and the thrift regulator. A great deal of work remains to be done.
We must detennine the specific powers fonner thrift institutions will retain. We must
uphold safety and soundness during the transition period. And we must develop and
implement a fair program dealing with OTS employees. Although we face many
challenges as the thrift industry undergoes fundamental change, I am confident we can
collectively develop good public policy.
We look forward to working with you and other Members of the Committee.
u
(0
federal financing
WASHINGTON, DC. 20220
April
30~
bonkNE
OJ
C\J
S
1996
FEDERAL FINANCING BANK
Charles·D. Haworth, Secretary, Federal Financing Bank (FFB),
announced the following activity for the month of March 1996.
FFB holdings of 9bligations issued, sold or guaranteed by
other Federal agencies totaled $66.7 billion on March 31, 1996,
posting a decrease of $1,311.7 million from the level on
February 29, 1996. This net change was the result of a decrease
in holdings of agency debt of $1,216.4 million, in agency assets
of $55.0 million, and in agency guaranteed loans of $40.3
million. FFB made 15 disbursements during the month of March.
FFB also received 14 prepayments in March.
Attached to this release are tables presenting FFB March
loan activity and FFB holdings as of March 31, 1996.
RR-I042
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Page 2 of 3
FEDERAL FINANCING BANK
MARCH 1996 ACTIVITY
BORROWER
DATE
AMOUNT
OF ADVANCE
FINAL
MATURITY
INTEREST
RATE
GOVERNMENT - GUARANTEED LOANS
GENERAL SERVICES ADMINISTRATION
Chamblee Office Building
Foley Square Courthouse
Atlanta CDC Office Bldg.
Chamblee Office Building
Foley Services Contract
Chamblee Office Building
Chamblee Office Building
Foley Square Office Bldg.
HCFA Headquarters
Memphis IRS Service Cent.
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
S/A
3/7
3/8
3/15
3/15
3/27
3/28
3/29
3/29
3/29
3/29
$283,270.18
$187,845.00
$3,449.00
$937,418.36
$359,818.89
$3,660,000.00
$1,445.06
$55,954.00
$726.78
$931,811.69
4/1/97
7/31/25
9/2/25
4/1/97
7/31/25
4/1/97
4/1/97
7/31/25
7/1/25
1/2/25
5.268%
6.555%
6.808%
5.530%
6.710%
5.583%
5.617%
6.872%
6.872%
6.873%
3/18
$7,314,981.31
11/2/26
6.883% S/A
3/6
3/14
3/20
3/22
$3,800,000.00
$1,026,000.00
$2,983,000.00
$837,000.00
1/2/07
1/2/24
12/31/14
12/31/19
6.043%
6.747%
6.640%
6.661%
GSA/PADC
ICTC Building
RURAL UTILITIES SERVICE
Oregon Idaho Utile #415
Pineland Telephone #403
Central Iowa Power #385
South Texas Electric #322
S/A is a Semi-annual rate:
Qtr. is a Quarterly rate.
Qtr.
Qtr.
Qtr.
Qtr.
Page 3 of 3
FEDERAL FINANCING BANK
(in millions)
Net Change
Program
FY
196
Net Change
March 31. 1996
February 29. 1996
$ 2,008.3
$ 2,043.5
7,504.5
0.0
300.0
9,812.7
8,685.6
0.0
300.0
11,029.1
-35.3
-1,181.1
0.0
0.0
-1,216.4
Agency Assets:
FmHA-ACIF
FmHA-RDIF
FrnHA-RHIF
DHHS-Health Maintenance Org.
DHHS-Medical Facilities
Rural utilities Service-CBO
Small Business Administration
sub-total*
1,415.0
3,675.0
21,015.0
8.1
23.8
4,598.9
0.1
30,735.9
1,470.0
3,675.0
21,015.0
8.1
23.8
4,598.9
0.1
30,790.9
-55.0
0.0
0.0
0.0
0.0
0.0
0.0
-55.0
-55.0
0.0
-685.0
0.0
0.0
0.0
0.0
-740.0
Government-Guaranteed Loans:
DOD-Foreign Military Sales
DHUD-Community Dev. Block Grant
OHUD-Public Housing Notes
General Services Administration +
DOl-Virgin Islands
DON-Ship Lease Financing
Rural utilities Service
SBA-Small Business Investment Cos.
SBA-State/Local Development Cos.
DOT-Section 511
sub-total*
3,357.2
81.0
1,626.8
2,309.9
20.2
1,382.8
17,048.7
0.0
336.5
13.5
26,176.6
3,404.8
83.5
1,626.8
2,303.3
20.2
1,382.8
17,040.0
2.0
339.9
13.5
26,216.9
=========
$ 68,036.8
-47.6
-2.5
0.0
6.6
0.0
0.0
8.6
-2.0
-3.4
-0.1
-40.3
-135.8
-8.1
-61. 7
43.1
-0.8
-49.3
-226.9
-5.5
-19.3
-1.0
-465.3
Agency Debt:
Export-Import Bank
Resolution Trust Corporation
Tennessee Valley Authority
U.S. Postal Service
sUb-total*
grand-total *
*figures may not total due to rounding
+does not include capitalized interest
=========
$ 66,725.2
3/1/96-3/31/96
$
1011/95-3/31/96
$
-498.0
-5,704.1
-3,200.0
-6.964.7
-16,366.8
=========
=========
$ -1,311.7
$-17,572.1
DEPARTMENT
OF
THE
TREASURY
NEWS
omCE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220 - (202) 622-2960
REMARKS TO
THE TREASURY BORROWING ADVISORY COMMITTEE
OF THE PUBLIC SECURITIES ASSOCIATION
BY THE HONORABLE JOSHUA GOTBAUM,
ASSISTANT SECRETARY OF THE TREASURY FOR ECONOMIC POLICY
APRIL 30, 1996
RR-I043
FQT press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
Embargoed for release until delivery.
Remarks to
The Treasury Borrowing Advisory Committee
of the Public Securities Association
By the Honorable Joshua Gotbaum,
Assistant Secretary of the Treasury for Economic Policy
April 30, 1996
We are pleased to welcome you on another of your quarterly visits. Secretary Rubin and
all of us at the Treasury place great value on this long-standing relationship. You give us a
perspective that only direct market experience can provide.
Let's begin with a review of the current state of the economy. All in all, we are very
pleased.
Spurred in part by the strong steps taken by the Administration in 1993, what had been a
relatively weak recovery gained strength and is now in its sixth year. The economy seems
largely free of the distortions and cyclical imbalances that have sometimes spelled trouble
in the past.
•
In recent years, employment growth in the U.S. has been impressive. There have been 8112 million net new jobs created since January 1993. A recent study by the Council of
Economic Advisers has pointed out that most of the new jobs are full time and 68 percent
of full-time jobs created during the past two years were in industry and occupation groups
paying above the median wage. This is obviously encouraging.
•
Inflation is at its lowest levels in a generation. Underlying inflation still shows few signs
of acceleration, although clearly energy and grain prices will be watched.
•
The investment in capital equipment that is so vital for continued growth in productivity
and competitiveness has expanded rapidly. Real business expenditures for equipment
continue to be strong, both in constant-dollar terms and as a share of Gross Domestic
Product.
•
Significant progress has been made in reducing the Federal budget deficit. The deficit is
projected to decline this fiscal year to about $145 billion, or 2 percent of Gross Domestic
Product, the lowest such ratio in 17 years. In 1995, the last year for which comparable
international data are available, the U.S. public-sector deficit as a ratio to Gross Domestic
Product was the lowest of any major industrialized country.
Today our economy continues to gro w at what we take to be a moderate and sustainable
pace. Government shutdowns and severe winter weather now lie some distance in the past.
Nonetheless, as a result of other special factors, such as the recent General Motors strike, the
numbers continue to bounce around. (Somehow, that trove of pure, even, unbiased statistical
data that we need for absolute certainty always seems to lie just some short distance in the
future.)
PSA0496.doc
Remarks to the PSA Treasury Borrowing Advisory Committee
The specific numbers may in fact be less important than the shift in perception that seems
to have taken place since the time of our last meeting. Then, you will recall, we were not
looking so much for pure, unbiased statistics -- we were happy to get any statistics at all. It
appeared at the time to some observers that the economy had weakened more than
government shutdowns and severe weather could explain. There was a lot of talk about
excessive inventories and downside risk. With the flow of statistical information temporarily
interrupted, it was difficult to know how seriously to take this point of view.
Now, the perception is quite different. A run of stronger numbers has largely removed the
risk of a significant slowing as a topic of serious discussion. The statistical evidence has been
gradual, but two separate employment reports stand out:
•
A strong rebound in February payroll employment (originally 705,000 and then revised to
624,000) reported in early March raised the Treasury yield curve from 2 to 30 years by 25
to 35 basis points in a single day -- a big move by any standard.
•
There was an encore in early April with the release of the employment results for March.
While the payroll employment gain was only 140,000, that was about double the market
expectation in view of the presumed impact of the strike at General Motors. Again, yields
moved sharply higher, this time by roughly 25 basis points over the same range of
maturities.
•
In addition, there was an aftershock to the March employment result in the following
week when an inflation scare gripped the markets. What still seems to be a temporary
spike in the prices of crude oil and petroleum products coupled with a tight grain supply
situation created a market atmosphere in which the 30-year Treasury seemed headed for 7
percent and stock prices dropped sharply.
There have been subsequent rate declines and a calmer atmosphere has returned, as
reflected in range trading rather than sharp and upsetting rate shifts. But we seldom go back
exactly to where we were. The economy is now viewed as being potentially stronger than
seemed to be the case three months ago. Furthermore, although the intense focus on inflation
by some market participants has largely passed, it probably heightened general awareness of
inflation risks -- for example, gas price concerns are now widely reported -- even though
there is little solid evidence of any change in underlying inflation fundamentals.
Has the economy strengthened so much that it now threatens to exceed safe speed limits
and drive interest rates up? Not very likely. This all seems to be a case of observers
changing their minds, not about the direction of the economy, but only about its rate of
growth - and only modestly at that. Three months ago the consensus seemed at risk of listing
too far in the direction of pessimism. Now it has swung in a more optimistic direction. But,
there is very little indication that the economy itself has ever gotten very far from a stable
growth path.
The initial estimate of growth in the first quarter will be released on Thursday. Market
estimates expect a modest increase, even though special factors, like severe weather and the
government shutdoVYn, held the quarter down. The second quarter may benefit statistically
-2-
PSA0496.dbc
Remarks to the PSA Treasury Borrowing Advisory Committee
from the reversal of some of these same special factors. But we should remember that
"special factors" are no less so when they contribute to growth as when they retard it.
Looking further ahead, the consensus forecast continues to call for steady, sustainable growth,
somewhat above 2 percent for the four quarters of this year. To us, that still seems to be the
most probable outcome.
Those are our views, but of course the primary reason we are here is to learn yours. We
appreciate your coming and look forward to the meeting.
-30-
-3-
PSA0496.ooc
Monthly Report
by the
Secretary of the Treasury
Pursuant to the
Mexican Debt Disclosure Act
of 1995
April 1996
Treasury Secretary's Repon to Congress
April 1996
Contents
I.
Overview
ll.
Current Condition of Mexico's Economy
a.
b.
c.
d.
e.
f.
g.
h.
page 1
3
Monetary Policy
Fiscal Policy
Structural Reform and Privatization
Information Disclosure
Economic Adjustment
Banking Sector Developments
Financial Market Trends
International Reserves
Guarant~
17
ill.
Disbursements, Swaps,
to the U.S. Treasury
IV.
Mexico's Financial Transactions
17
V.
Status of the Oil Facility
19
and Compensation
Graphs: Key Trends in Mexico's Economy and Financial Markets
a.
b.
c.
d.
e.
f.
Monetary Policy
Inflation; Interest and Exchange Rates
Currency and Stock Markets
Trade Balance
GDP, Industrial Production, and Employment
Vehicle Sales, Retail Sales and Construction
Treasury Secretary's Repon to Congress
April 1996
I.
Overview
In providing assistance to Mexico under the February 21, 1995 Agreements,
the U.S. govenunent acted to protect vital U.S. interests: American exports
and jobs, the security of our common border, and the stability of other
emerging market economies. U. S. and other international support in 1995 has
allowed Mexico to implement the policies necessary to avert default, regain
access to capital markets, and restore the basis for sustainable growth.
Mexico has met all of its payment obligations under the U.S. fmancial support
program. So far, it has repaid a net total of $2 billion in outstanding shortterm swaps to the Treasury and Federal Reserve, and made interest payments
totalling $988 million. As of April 30, $10.5 billion will remain outstanding,
all in the form of medium-term swaps. No further principal repayments are
due until June 30, 1997.
All of Mexico's obligations to the United States are backed by proceeds from
Mexico's crude oil, oil products, and petrochemical product exports.
Payments for these exports flow through a special account at the Federal
Reserve Bank of New York. As of April 16, $9.6 billion had passed through
this account.
Mexico's strong policy fundamentals and the U.S.-led international financial
support package have continued to produce encouraging results. Mexico
attained a budgetary surplus in 1995. Monetary policy remains tight.
Monthly inflation fell to 2.2% in March, down from 2.3% in February and
3.6% in January. Prices increased by 1.8% in the fIrst half of April, led by
anticipated increases in some public prices and the minimum wage in late
March and early April. Interest rates fell sharply: rates on the benchmark 28day cetes dropped to 31.9% in the April 23 auction, down from 38.9% in the
March 26 auction.
Data indicate that an economic recovery is underway in Mexico. GDP rose by
2.3% from the third to the fourth quarter in 1995, following an increase of
2.8% from the second to the third quarter (both seasonally adjusted). Most
indicators suggest continued growth in the ftrst quarter (on a quarter-overquarter basis). Exports have remained strong, and other data also suggest
some revival in domestic demand from the deep recession of 1995.
Mexico's merchandise trade balance remains strongly in surplus in 1996, with
a surplus of $551 million recorded in March (preliminary data), even as total
imports have increased by 9.9 % compared to the same period last year, and by
7.7% compared to 1994. Indeed, this was a record high for Mexico's fIrst
quarter imports. Similarly, U.S. exports to Mexico in January and February
were the highest ever recorded for these two months.
1
Treasury Secretary's Repon to Congress
April 1996
Receding inflationary expectations and other improving fundamentals have
helped to cause the peso to appreciate in April, despite the fall in domestic
interest rates. Mexico's stock market also moved to record highs in peso
terms, up 4.7% from the end of March through April 26, and 38% above precrisis levels. And as of April 19, international reserves have risen to $15.7
billion from the year-end 1994 level of $6.1 billion and are roughly unchanged
from year-end 1995.
This month, Mexico announced that it would exchange between $1.0 and $2.5
billion in Brady Bonds for anew, 3D-year sovereign debt instrument, further
confIrming its reentry to the international capital markets. After having raised
approximately $6.4 billion in international markets during 1995, the Mexican
government and its agencies issued another $3.4 billion in the fIrSt quarter of
1996, at longer maturities and on improving terms. If successful, this new
global bond issue will create a new benchmark for long-term Mexican foreign
currency debt.
While fInancial markets have rallied, the situation of Mexico's banking system
remains difficult. The level of nonperforming loans remains high, as
acknowledged by the decision of Mexico's second largest bank to significantly
increase its reserves. However, twelve Mexican banks, representing 94 % of
banking system assets (excluding intervened banks), are being recapitalized.
Injections of p36 billion in new private capital have been committed to these
banks. Through FOBAPROA, the central bank's insurance fund, the government
has purchased loans from these banks in proportion to the new capital injected
by shareholders.
2
Treasury Secretary's Report to Congress
April 1996
II.
Current Condition of Mexico's Economy
a.
~onetuyPolicy
Mexico overperformed on its 1996 monetary program first quarter targets by
a large margin.
•
Net international reserves (NIR) grew by $1.8 billion during the frrst
quarter, $2.3 billion above the government's target.
•
Net domestic credit (NDA), the monetary base less international
reserves, contracted during the same period by roughly 31 % (p21
billion) compared to a targeted decrease of 1. 7 % (p 1. 2 billion).
•
Similarly, base money shrank by about 11 % (p7 billion), more than the
Government's projected drop in base money of 7.5% (p5 billion).
•
The overperformance on reserves was the result of several large capital
market debt issues by the Government of Mexico during the DecemberFebruary period.
NDA is defmed as base money less international reserves, so this
stronger reserve accumulation led to a greater-than-targeted
contraction in NDA - and thus the overperformance on the NDA
target.
Monetary aggregates indicate policy remains tight
•
In 1996 through April 19, base money fell 16% to p56.3 billion.
Moving past the fIrst quarter, the fall in base money will likely taper
off, given that the demand for money typically falls in the early part of
the year.
In 1996, Ml (the monetary base plus checking deposits) grew
about 2.6% in nominal terms during the month of March,
bringing Ml at the end of the frrst quarter- to the same level that
existed at the end of 1995.
•
In 1996 through April 19, NDA fell by p21.7 billion. NIR increased by
P 11. 3 billion during the same period.
3
Treasury Secretary's Repon
April 1996
to
Congress
Market indicators also suggest that monetary policy remains firm
The April 23 primary auction resulted in a yield of 31.9% on an annualized
basis for 28-day cetes, the benchmark government security. This was down
from 34.6% set in the April 16 auction.
•
The real interest rate (the nominal rate adjusted for expected inflation)
on 28-day cetes was about 8% in mid-April on an annualized basis,
slightly above the rate in mid-March.
The peso appreciated 1.6% from the end of March to April 26, when it closed
at p7.42.
•
The real exchange rate appreciated by about 3.4% from end-March to
April 16. regaining ground to about the same real level posted endSeptember 1995, prior to last autumn's peso depreciation. It is still
down 26.1 % from November, 1994.
Monthly inj1lltion fell each month during the first quarter, but an up-tick is
expected in April
•
Monthly inflation fell to 2.2 % in March from 2.3 % in February and
3.6% in January 1996. Inflation crept upward during the fIrst half of
April, as prices increased by 1.8% due to a 12 % hike in the minimum
wage and a 7% increase in some public sector prices.
II.
b.
Fiscal Policy
Mexico's fiscal stance remains tight
Mexico announced this month that it had fallen well short of its spending
targets for the fIrst two months of 1996.
•
Hacienda announced that the government has spent roughly p6 billion,
or 11 % less than it had budgeted for January and- February.
Fiscal spending patterns usually increase during the second half
of the year.
4
Treasury Secretary's Repon to Congress
April 1996
•
The government attributed the lag in spending to regulatory procedures
and laws that must be respected before projects can be approved. The
government further stated that it anticipates the short-fall will be made
up by mid-year.
Mexico has targeted a balanced budget in 1996
•
Mexico's 1996 budget (annual public sector non-fmancial balance) is
projected to be balanced for the year.
•
The 1996 target for the primary balance is a surplus equal to 4.0% of
GDP.
II.
c.
Structural Reform and Privatization
In 1995, the Mexican government expanded its existing privatization and
liberalization program to include traditionally regulated sectors, such as
transportation, telecommunications, and energy (the program is described in
the December 1995 Semi-Annual Report).
Six groups register for Mexicali natural gas pipeline concession
Six groups, representing both domestic ar..d foreign interests, registered for the
concession announced last month to construct a natural gas pipeline network in
Mexicali.
•
The Mexicali concession represents the fITst permit to distribute natural
gas that is open to foreign participants.
•
Bids are to be submitted by June 3, 1996, and the Energy Regulatory
Commission is expected to announce a winner on August 12, 1996.
Port concession announced
On April 1, the Communications and Transportation Ministry (SCT)
announced that it would open bidding for a concession to operate a multi-use
terminal at the port of Ensenada.
•
The facility represents the fifth multi-use terminal and the seventh port
operation to be concessioned.
5
Treasury Secretary's Repon to Congress
April 1996
Mexico announces postponement in sale of Cosoleacaque petrochemical
complex
On April 11, Mexico's Energy Ministry announced that it would delay the
planned April 26 auction of the fIrst of four main petrochemical complexes
while it reviews the bidding rules that had been announced last· November.
•
The Energy Ministry stated that it expects to conclude the Cosoleacaque
sale with a delay of approximately four weeks. The Energy Ministry
has also indicated that the eventual sale will be limited to companies
that had registered prior to the original deadline.
Bidding announced for new satellite
On April 18, SCT opened bidding for rights to build and launch a new satellite
that will replace the Morelos II satellite - one of three satellites operated by
the Mexican government.
•
The winning bid is expected to be announced on June 20.
Mexico is currently drafting guidelines for private investment in satellite
operations, which are currently operated by state-owned TELECOMM. The
guidelines are expected to be announced later this year.
Long distance concessionaires merge operations
Two joint ventures that had received concessions to provide long-distance
services announced on April 22 that they would merge their operations.
•
The partners in Alestra - AT&T (U. S.) and Grupo Alfa (Mexico) announced that they had signed a memorandum of understanding with a
joint venture between GTE (U.S.), Bancomer (Mexico) and Telefonica
International (Spain).
Mexico is proceeding with pension privatization
As part of the reform of the social security system to increase domestic
savings, Mexico's Congress is completing legislation that will regulate
AFoRES, the fmancial entities dedicated to the administration of private
pension funds. It is anticipated that the law will passed by the end of this
month.
6
Treasury Secretary's Repon to Congress
April 1996
•
According to the Government of Mexico, the proposed legislation
includes provisions that will pennit U. S. and Canadian fInancial
institutions to own equity in AFORES on a basis consistent with
NAFTA, and thus to participate fully in the management of the pension
funds.
Although the Mexican Social Security Institute (IMSS) will also
be permitted to administer pension funds, no one participant will
be permitted to administer more than 17 % of total pension
resources during the fIrst four years, and 20% thereafter.
ll.
d.
Information Disclosure
Mexico has increased the breadth and frequency oj its reporting
Public disclosure of fmancial data by the Mexican government and the Bank of
Mexico has increased substantially.
•
Mexico has recently revised its data on foreign direct investment (FDI)
to make them more comprehensive and to reflect the actual timing of
fmancial flows more accurately.
•
In December 1995, the Bank of Mexico began to publish quanerly
targets for net domestic credit and net international reserves. This
change from the previous practice of publishing annual targets should
facilitate closer monitoring of monetary policy.
•
Mexico has improved the coverage and timing of its reporting on both
real and fmancial indicators, including data on output, inflation,
international reserves, balance of payments, fIscal and monetary
aggregates, and public debt.
•
The Mexican government and the Bank of Mexico now provide a wide
set of historical and current data on the Internet. 1
IMexican government financial data is available on the Internet at http://www.shcp.gob.mx/englishl and
from the Bank of Mexico at http://www.quicklink.com/mexico/mbfbanxica.htm. A copy of this Monthly
Report can be found at http://www.ustreas.gov/treasury/mexico/toc.html.
7
Treasury Secretary's Report to Congress
April 1996
II.
e.
Economic Adjustment
Available data suggest a recovery is underway, following a sharp contraction
in 1995
The recession appears to have reached its trough in the middle of 1995; GDP
declined by 6.9% for the year. On a seasonally adjusted basis, GOP rose by
2.8% from the second quarter to the third quarter and by 2.3 % from the third
quarter to the fourth quarter, according to the Government of Mexico.
While the recovery was initiated by the export sector, domestic demand
appears to have strengthened, particularly starting in the fourth quarter of
1995. Consumption, output in non-tradeable goods, and imports were higher
in the fourth quarter than in the third quarter.
Data for the fIrst quarter of 1996 suggest that the recovery continued:
•
Industrial production was down a much smaller than expected 0.2 % in
January 1996, after declining 4.9% in December 1995 on a year-overyear basis. This was the smallest year-over-year decline since March
1995.
In comparison with the 1982 fInancial crisis, the recovery in
industrial production has been faster; output in January 1996
was 1 % below its pre-crisis level versus a 13 % decline thirteen
months into the 1982 crisis.
Output in the domestic demand-sensitive construction sector
decreased by 8.6 % in January, after output had declined 22 %,
on average, during 1995. This was also the lowest year-overyear decline since March 1995.
•
Despite stronger domestic vehicle sales and consumer imports, retail
sales data indicate continued weakness.
Domestic vehicle sales in February were triple their July 1995
low, though sales remain about one-half of their pre-crisis level.
Consumer imports rose 0.4% in March on a monthly basis (not
seasonally adjusted), following a 10% increase in February.
8
Treasury Secretary's Report to Congress
April 1996
March imports are 49% higher than their July 1995 low, though
27% below the 1994 average level.
January retail sales were revised downward from a 5.8% yearover-year decline reported last month, to a 25.6% fall and were
down 16.4% in February, also on a year-over-year basis.
Labor markets continued to improve in March
•
The open unemployment rate, a narrow measure of urban joblessness,
declined from 6.3% in February to 6.0% in March (preliminary data),
after peaking at 7.6% in August 1995 and falling to 5.5% in
December.
The National Statistics Institute, Ineghi, also reported that on a
seasonally-adjusted basis, the rate fell to 5.7% - down from
6.1 % in February and 6.4% in January.
Adding the number of employees who involuntarily work less
than 35 hours a week, a measure of underemployment, the rate
fell from 8.8 % in February to 7.9 % in March, compared to its
peak of 10.4% in August 1995.
•
Registrations in the social security system (IMSS) , a measure of
employment in the formal economy, rose by 82,000 in March
compared to February, and were 430,000 higher than the low reached
in July of 1995. This is still 270,000 below the 1994 average.
Mexico's trade balance remains strongly in surplus
•
The trade surplus in March (preliminary data) was $551 million,
compared to $418 million in February. Mexico's exports were 10%
higher, and imports 11 % higher, than March 1995.
•
February's trade surplus was revised downward, from $562 million to
$418 million, compared to a $704 million trade surplus registered in
January. The revised balance primarily reflected an upward revision in
imports.
9
Treasury Secretary's Report to Congress
April 1996
While uncertainties remain, the economy is projected to grow in 1996
•
In a February survey by Consensus Economics, private analysts forecast
that GDP would rise 2.2% in 1996; this is an increase from the 2.0%
growth forecast in the December 1995 survey.
The Mexican Government, in its November 1995 budget
presentation, projected that GDP would grow by 3.0% in 1996.
ll.
f.
Banking Sector Developments
The banking system continues to restrocture
Mexico's banks have committed to raise p36 billion in new capital under a
program in which FOBAPROA, the central bank's insurance fund, purchases
loans from banks in proportion to new capital injected by shareholders.
Twelve banks, representing 94 % of banking system assets (excluding the six
intervened banks), have entered this recapitalization program since its initiation
in 1995.
•
Of the p36 billion committed in new private capital, p18 billion was
raised in 1995, with the rest to be raised in 1996. Of the total, p16
billion is equity, p7 billion is subordinated debt, and P 13 billion is
subordinated debt convertible to equity in five years.
•
These programs have allowed the capital-to-assets ratio of the banking
system to rise substantially since the beginning of last year.
•
Although the banks' ability to recover will depend in large measure on
the strength and speed of the broader economic recovery, it appears
that banks are now in a stronger position than they were in 1995 to
make new loans.
A new agency - similar to the Resolution Trust Corporation in the U.S. - is
being created to allow for the orderly disposition of fmancial assets owned by
FOBAPROA.
10
Treasury Secretary's Report to Congress
April 1996
Various government programs to encourage loan restructuring continue.
•
As of February, loans totaling 174 billion pesos had been restructured
under the various Investment Unit Programs (um).
•
Under the Debtor's Support Program (ADE) announced late in 1995, the
government has provided pIS billion to subsidize interest payments for
small- and medium-size debtors in 1995 and 1996, with banks adding
another p7 billion.
In April, the GOM announced an extension of the deadline for
participation among mortgagees.
Asset quality remains a concern
The level of nonperforming loans remains high, at about 18 % for the system
as a whole, as of the end of February.
In accordance with improvements bewg made to the bank regulatory system,
Mexican banks will begin to report results following U. S. GAAP, fIrst to the
Banking Commission on a preliminary confidential basis in July 1996, and on
a public basis in 1997. At the same time, the Banking Commission will also
. move toward U. S. bank regulatory standards.
•
Mexican authorities estimate that the level of non-performing loans
would be substantially higher under U. S. GAAP.
•
In April, Bancomer, Mexico's second largest bank, announced that it
had increased reserves to cover 100% of non-performing loans during
the fIrst quarter. Bancomer is the fIrst major bank to anticipate the
new accounting and reporting requirements by creating reserves
signifIcantly in excess of current requirements.
11
Treasury Secrecary's Report Co Congress
April 1996
ll.
g.
Financial Market Trends
Despite volatility in the U.S. markets dwing April, Mexico's fInancial markets
continued to strengthen on favorable economic news.
•
Following a period of relative stability, the peso appreciated during
April. The peso exchange rate, as of April 26, was 7.42 pesos per
dollar, up from its March 29 close of 7.54 pesos.
The peso is about 9.7% above its low of p8.14 in November
1995.
•
As of April 26, Mexico's stock market was up 4.7% since the end of
March. Dwing the fIrst quarter of 1996, the Bolsa rose 10.6%; a 13%
rise in dollar terms made it the best performer among the world's
equity markets for the quarter, as reported in The Wall Street Journal.
In peso terms, the stock market is 38% above pre-crisis levels,
and 122 % above its February 1995 lows.
In dollar terms, the stock market is down 36% from pre-crisis
levels, but up 79% from its February 1995 lows.
Domestic interest rates continue to fall, largely on improved expectations
about inflation
•
Interest rates decreased to 31.9% on an annualized basis in the April 23
auction of 28-day cetes, the benchmark government security, down
from 38.9 % in the March 26 auction and the lowest since the
December 28, 1994 primary auction.
•
In the secondary market, the. overnight cetes rate was 27.9% as of
April 26, down from 35.5% on March 29; the 28-day cetes rate was
29.5%, down from 37.5%.
Brady Bond spreads narrow
Mexican Brady Bonds were subject to some volatility in the month of April
due to continued volatility in U.S. interest rates. Yields were down through
April 26.
12
Treasury Secretary's Repon to Congress
April 1996
•
Mexican Brady Par Bond interest rate spread over U.S. Treasuries,
adjusted to remove the effect of partial collateralization, has fallen from
7.38 % on March 29 to 5.92 % on April 26. This is more than thirteen
percentage points below the 19.37 % spread reached in March 1995.
Mexico has further solidified its standing in the international capital markets
After raising about $5.7 billion in international markets in the second half of
1995, the Mexican government and its agencies raised about $3.4 billion
during the first quarter of 1996, issuing longer term debt on improving terms.
In April, Mexico announced an offer to exchange between $1.0 billion and
$2.5 billion in Brady Bonds for a new 30-year global bond sovereign issue.
•
Market reaction was positive, but results are still uncertain since the
yield on the new debt will be fixed through a Dutch auction on April
30.
•
Standard & Poor's has assigned the issue a "BB" rating (with a
"negative" outlook), in line with S&P's rating for Mexican Bradys and
the sovereign foreign currency rating.
Several corporations announced plans to launch new debt issues
•
Grupo Iusacell, a cellular telephone company, announced that it will
launch up to $200 million in medium-term debt, and Elektra, an
appliance conglomerate, plans to issue a five-year $100 million
Eurobond by the end of April.
•
Televisa announced plans to issue $500 million in a private debt
placement in the U.S. It will use the net proceeds to refinance existing
debt and defease a $200 million issue maturing in November 1997.
•
Grupo Dina, Mexico's largest truck and bus maker, announced a swap
of $150 million in Euronotes for new six-year notes. The existing
notes, scheduled to mature in November 1997 and carrying a 10.5%
coupon, will be exchanged for 12.0 % zero-coupon notes that will not
require cash interest payments for the first two and one-half years.
13
Treasury Secretary's Report to Congress
April 1996
The debt overhang is forcing some companies to restructure
On April 2, Grupo Sidek announced a debt restructuring plan to retire $1
billion in debt through the exchange of assets and equity for debt, as well as
the cash sale of assets. This announcement follows a suspension of payments
on a Eurobond issue in March.
Table 1. Mexican public-sector note and bond issuances, 1996
I
Issuer
Bancomext
I
Type
cp2
I
Date!
I
Amount
(u.s.$ M)
I
Tenor
I
Interest
rate
January 10
$300
180 days
UBOR+
2.5%3
~
March 18
DM300 JDillion
($203)
3 years
UBOR+
3.25%
Eurobond
January 25
$100
3 years
9%
Private
February 14
1140 billion
($132 )
10 years
7%
EMTNs
February 26
R250million6
($68)
3 years
17%
Pemex
Eurobond
April 2
GOO billion
($193)
2 years
12.25%
United
Eurobond
January 29
DM1.5 billion
($1,040)
7 years
10.375%
Global Bond
February 6
$1,000
5 years
9.75%
Samurai
Bond
March 28
¥400 billion
($377)
6 years
6%
Global Bond
Price April 30,
$1.0-$2.5
billion7
30 years
tbd7
Naf"msa
Placement
Mexican
States
settle May 77
1.
2.
3.
4.
5.
6.
7.
Date of settlement unless otherwise noted.
Commercial Paper.
Discount to yield.
Floating rate note.
Euro-medium term note.
South African Rand.
Face value and coupon to be determined through exchange of Brady Bonds.
14
I
Treasury Secretary's Report to Congress
April 1996
n
h.
International Reserves
On April 19, international reserves were $15.7 billion, according to the Bank
of Mexico (BoM) defInition, up $223 million from the end of March and $27
million below the end of last year. According to the IMF defInition, net
reserves on April 19 were $1.4 billion, $338 million below the level at the end
of March. 2
•
Net payments on public sector external debt resulted in an outflow of
reserves of $631 million in the fIrst week of April. Most of this
outflow was the result of large end-of-quarter interest payments; $235
million in interest was paid to the United States.
The BoM measure booked most of these payments at the end of
March, but the IMF measure did not record most payments until
April 1.
Aggregate reserves remain in line with several measures of reserve adequacy,
despite a pick-up in the pace of imports this year and an upward revision in
estimated amortizations of public sector external debt in 1996.
•
Reserves equal more than three months of anticipated non-maquiladora
imports.
•
Reserves are approximately equal to calendar year 1996 amortizations
of external public sector debt for the Government of Mexico and its
agencies (reported by the Mexican Finance Ministry as $15.8 billion).
2The BOM now publishes international reserves according to both definitions: the IMF's definition differs
from the BOM'S definition principally in that the former subtracts liabilities to the IMF. (Other differences are
described in the January 1996 report.)
15
Treasury Secretary's Repon to Congress
April 1996
Table 2. Mexico's international reserves (USS billions)
BOM-DefInition Net
International Reserves
1992 December
18.6
1993 December
24.5
1994 December
6.1
Q1 1995 (end period)
6.9
Q21995
10.1
Q3 1995
14.7
Q4 1995 (end year)
15.7
January 31, 1996
15.5
February 29, 1996
15.8
March 29, 1996
15.5
April 19, 1996
15.7
16
Treasury Secretary's Report to Congress
April 1996
m.
Disbursements, Swaps, Guarantees and Compensation to the U.S.
Treasury
As of April 30, 1996, $10.5 billion remain outstanding under the U.S. support
program, all in the form of medium-term swaps. No further principal
payments are due until June 30, 1997 (see Table 3, over, for the amortization
schedule of outstanding swaps).
•
The outstanding total reflects full repayment by Mexico of the $3
billion in short-term swaps: $1 billion on March 14, 1995; $700 million
on October 11, 1995; and $1.3 billion on January 29, 1996.
•
A total of $13.5 billion in U.S. funds has been disbursed to Mexico
under the support program -- $3 billion in short-term swaps and $10.5
billion in medium-term swaps (swap arrangements are described in
December 1995 Semi-Annual Report). Of this total, no more than
$12.5 billion has been outstanding at one time. To date, the United
States has not extended any securities guarantees to Mexico under the
support program.
Mexico has not missed any interest payments or required principal repayments
under any of the swaps. To date, the United States has received $988 million
dollars in interest payments from Mexico: the Exchange Stabilization Fund
(ESP) has received $934 million for short- and medium-term swaps and the
Federal Reserve received $54 million on its short-term swaps with Mexico.
IV.
Mexico's Financial Transactions
In accordance with the February 21, 1995 Agreements, Mexico has requested,
and Treasury has authorized, the use of the funds disbursed to date to redeem
tesobonos and other short-term, dollar-denominated debt of the Mexican
government and its agencies. All funds have been used to redeem tesobonos,
which are now fully retired.
17
Amortization Schedule of ESF and Federal Reserve Swaps with Mexico
Repayments to date (bold"- Scheduled Repayment for outstanding balance (USS million)
Medlum·term swaps provided on:
Short-term swaps* provided on:
04/19/95
05/19/95
07/05/95
03/14/95
01/11/95
01/13/95
02/02195***
3000
3
000
2000
2500
2000
500
5001
Current Interest Rate:
7.40%1
10.16%1
10.16% 1
9.20%
nla
nlal
nla
Amount
Disbursed
(U.S. Millions)
13500
Quarter
EndinQ
Mar-31-95
Jun-30-95
Sep-30-95
Oec-31-95
Mar-31-96
Jun-30-96
Sep-30-96
Oec-31-96
I------Mar-31-97
Jun-30-97
Sep-30-97
Oec-31-97
Mar-31-98
Jun-30-98
Sep-30-98
Oec-31-98
Mar-31-99
Jun-30-99
Sep-30-99.
Oec-31-99
Mar-31-2000
Jun-30-2000
Sep-30-2000
Oec-31-2000
I
6,000
5,000
2,500
.
__ L
_ _ . : _ ....
I
10 500
10500
500 (Mar 14) 500 (Mar 14)
700 (Oct 11
1,300 (Jan 29)
,
.
I
I
Due (USS milliard
Quarterly Annually****
r.anr.. " .. nt
0
0
0
0
0
0
0
0
0
375··
375
375
375
375
375
750
0
0
0
0
0
0
0
0
0
245··
245
245
245
245
245
245
245
245
245
245
305
0
0
0
a
0
0
0
0
170··
170
170
170
170
170
170
170
170
170
170
130
~nuivalent amounts for ESF and Federal Reserve .
••AII medium-term swaps payments are due on last date in each calendar quarter.
••• $2 billion in short term swapS disbursed on February 2, 1995 were rolled over for an additional 90 day period on
May 3, 1995, and August 1, 1995, for a new maturity date of October 30, 1995. On October 11, Mexico repaid $700 million of
these obligations. The outstanding $1.3 billion was rolled over for an additional 90 day period on October 30, for a
new maturity date of January 29, 1996, when they were repaid .
•••• This column represents the sum of quarterly payments in a given year; it does not represent an additional payment.
a
0
a
0
0
0
0
0
0
205**
205
205
205
205
205
205
205
205
205
205
245
0
0
415
620
620
620
995
995
995
995
995
995
1,370
640
245
0
0
1,655
3,605
4,355
885
Treasury Secretary's Report to Congress
April 1996
v.
Status of the Oil Facility
Payments through the Federal Reserve Bank of New York account
The payment mechanism, established under the Oil Proceeds Facility
Agreement, continues to function smoothly.
Independent reviews in August 1995 and February 1996 have confrrmed that
the Mexican oil proceeds fInancial mechanism is working well. In each semiannual review, Petroleos Mexicanos' (PEMEX) independent public auditors,
Coopers & Lybrand, analyzed the information utilized for the previous two
quarterly export reports prepared by PEMEX and provided to the U.S. Treasury
pursuant to the Oil Proceeds Facility Agreement. According to their reviews,
the quarterly reports "fairly present" information re1ated to both PEMEX'S oil
exports and the collection of proceeds from such exports. Similar reviews will
be performed every six months, with the next one expected in August.
As of April 16, $9.6 billion had flowed through Mexico's special funds
account at the Federal Reserve Bank of New York since the oil agreement
went into effect in early March 1995. An average of about $25 million flows
through the account each day. To date, there have been no set-offs against the
proceeds from Mexico's crude oil, petrochemical, and refined product exports.
19
Mexico has pursued tight monetary policy .
• Net domestic credit remains tightly controlled in 1996.*
rJ)
70
60
50
40
c:
30
Qj 20
Q.
10
z
0
-10
-20
-30
0
Dec 95
Jan 96
Feb 96
Marg6
Apr 19
1996
Monetary Net International Net Domestic
.. ..
Base
Reserves
Credit
-
* Beginning in 1996, the BOM has changed its definition of NIR to indude IMF liabilities. This accounting change has
the effect of reducing NIR and increasing NOA. Base money is unchanged by this accounting adjustment.
BOM MONETARY
TARGETS FOR Q1
Q1 Target
Q1 Actual
Difference
Monetary Base
61,909
59,499
-2,410
NDA
65,673
46,362
-19,311
NIR
3,684
13,137
+9,453
(NP MILUONS)
Mexico's stabilization policies are working .
• Inflation is well below its April 1995 peak, though an up-tick is
expected this month.
.
-
Change Bi-Weekly CPI
10%
Change Monthly CPI
8%
6%
4%
2%
0%
10
10
10
10
C:
«I
.ll
.!.
.!.
en
~
Q)
LL
~
m
en
«I
Cl.
~
.
10
10
10
>.
cu
m
C
"3
en
0{
~
~
~
.
10
10
c,
m
m
Cl.
u
m
~
~
~
Q)
0{
10
10
10
.!.
>
0
cJ
Q)
m
0
fJ)
z
m
0
.
<0
<0
<0
C:
cu
.ll
.!.
LL
~
en
m
m
C1I
Q)
~
<0
m
c3.
0{
• Nominal interest rates are trending down.
90%
80%
70%
28-day Cetes
Real
-
..
auction rate Interest Rate
60%
.......
SO%
40%
30%
20%
10%
0%
·10%
·20%
..... .........--. '. ,........
•••••
•
#
,
•••
• • • • •#
.
•••
• The real exchange rate is some 240/0 above its 1995 low but still
down 29% from November 1994.
130
120
0
0
~
II
0
0)
0)
~
-
Monthly Average
110
100
90
80
70
60
~
~
~
ci
0
t!f
~
,
c: .Q
~ ~
tfl
~
&!.
J
:§?
&!.
Q.
«
~
~
J
:§?
,
§
"'")
~
-,5
~
~
g, if,
«
(J)
~
~
~
ai J
~
/R,
c:
~
/R, &!.~ ~
&!.
tl $ ~
.Q
•
.
I
"•
03118
I,
I
04/10
:l
CD
CD
_.
-<
-_.
en
en
en
-C
CD
..,
b
.,_.
lit
_.
<
CD
•
3en
CD
0
CD
"a
r+
><
(J
• t~
0
.
t
I~
"V
C"
0
I»
r+
CD
_
.
en
~
.,
I»
3
(")
~
0
en
r+
0
.
en
_.
n
l
•
...a.
~ 0~0
~
0
...a.
en
8
...........
3:
CD
><
•
•
,,•
,•
•
,,,
•
",'
:
,
•,,
•,
,
,,,
,
",
•,,
'.,••
•,,
4-
0~
,-
.-•-.
0~
.~
,,,'-,
0
02/27
02/06
01/16
12/22
12/01
11110
10/20
10/02
09/12
08/21
08/01
07/12
06122
06/02
05/12
04124
04/04
03/14
02122
02102
01113
12126
12/06
o~
..a.
Index: 12/2/94 = 100
CD
04125 -
04115
03128
03113
02126
02113
01129
08130
08116
08102
07/19
07105
08121
06/07
.Q.
en
(")
04/25
04/18
04111
04/02
03/26
03/18
03/11
03/04
02126
02/16
02/09
02/01
01125
01/03
01/18
12126
12/18
12/08
12/01
11/24
11/16
11/09
11/01
CD
0.
::r
I»
en
~
C!:.
I»
-_.
-
<
0
0
en
01110
j
ca
I»
~
05t'23
j
CD
ii ii
~
1f.!!:llo
,,
~
•'1J
05J09
04125
04111
03128
03113
02127
02113
01130
01/18
01102
~
Percent voI.mlty
'"
CD
CD
~
0
--.
....
I~WI(l)
~ - "8
ca
NP per SUS
.....
.....
_.C"
CQ
:l
0.
::::.
CD
r+
..,
en
c
...CD_.
r+
C
-tt
..,
C"
CD
3
CD
C
CD
n
CD
::r
r+
Q.
I»
:l
Q.
CD
-N·
I»
en
r+
en
I»
::r
0.0
., en
::::. CD
~"a
I» CD
~::r
•
0.
0-4
::s
.... ::s
CD
n
tn
_.::s
0
<
CD
C.
~
-C
3
_.
<
CD
D)
=r
tn
r+
~
~
iii-_.t»3
.tn CD
(')e!.
(I)
::Tn
_.
-ltD)
0
::Ttn
,..
::!I
CD ><
::T _ e
CD
_. 0n
CC
-
"'3:
::TCD
Mexico's level of imports has risen since April
1995 but a trade surplus persists
•
Imports and Exports.
SUS millions
8,000
,.... " ,
7,000
6,000
5,000
•
4,000
3,000
,
." ',' .'.-, ,. , .-"
.
U-_~
Jan-94
•
',
. --. ,
"
•• -
, .',
, .'
~_f"
,
_ _....I-_ _ _ _ _ _" " " " _ - - ' -_ _J . . - _ - " - _ - I_ _""""_--'-_ _J..-_--'-_---'-
M..-94
M8y-94
Jut-94
Nov·94
Sep-94
Jan-95
M..·95
M8y-95
Jul-95
Nov·95
Sep-95
Jan-96
Mar·96
Trade Balance .
$USmilions
o
·1.000
·2.000
• Imports of Consumer Goods.
SUS Millions
YN % Change
40%
30%
20%
10%
600
Imports 01 Consumer Goods Yf'(
(rnilions $)
500
~-...--~O%
-10%
-20%
400
-30%
-40%
-50%
* *, ~
* ~ * ~*
300~~----~---"---~--~--~--~--~--~--~~~~---~~~-~~0%
~
(]
~
~
~
~
~
,
~
,
~
.K
~
~ ",~,~
~S
~
~
~
~
~
£:f~
~
~
~
&
~
~
~
~
cJ
~
r:f
~
:sJ
~
Signs suggest a recovery is underway, after a
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DEPARTMENT
OF
THE
TREASURY
NEWS
omCE OF PUBLIC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C .• 20220. (202) 622·2960
FOR RELEASE AT 2:30 P.M.
April 30, 1996
CONTACT:
Office of Financing
202/219-3350
TREASURY'S WEEKLY BILL OFFERING
The Treasury will auction two series of Treasury bills
totaling approximately $27,000 million, to be issued May 9, 1996.
This offering will result in a paydown for the Treasury of about
$3,925 million, as the maturing weekly bills are outstanding in
the amount of $30,922 million.
Federal Reserve Banks hold $7,448 million of the maturing
bills for their own accounts, which may be refunded within the
offering amount at the weighted average discount rate of accepted
competitive tenders.
Federal Reserve Banks hold $4,815 million as agents for
foreign and international monetary authorities, which may be
refunded within the offering amount at the weighted average
discount rate of accepted competitive tenders. Additional amounts
may be issued for such accounts if the aggregate amount of new
bids exceeds the aggregate amount of maturing bills.
Tenders for the bills will be received at Federal
Reserve Banks and Branches' and at the Bureau of the Public
Debt, Washington, D. 2. This offering of Treasury securities
is governed by the terms and 'conditions set forth in the Uniform
Offering Circular (31 CFR Part 356) for the sale and issue by the
Treasury to the public of marketable Treasury bills, notes, and
bonds.
Details about each of the new securities are given in the
attached offering highlights.
000
Attachment
RR-I044
For press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
HIGHLIGHTS OF TREASURY OFFERINGS OF WEEKLY BILLS
TO BE ISSUED MAY 9, 1996
April 30, 1996
Offering Amount
.
Description of Offering:
Term and type of security
CUSIP number
Auction date
Issue date
Maturity date
Original issue date
Currently outstanding
Minimum bid amount
Multiples .
$13,500 million
$13,500 million
91-day bill
912794 3C 6
May 6, 1996
May 9, 1996
August 8, 1996
February 8, 1996
$16,456 million
$10,000
$ 1,000
182-day bill
912794 3N 2
May 6, 1996
May 9, 1996
November 7, 1996
May 9, 1996
$10,000
$ 1,000
The following rules apply to all securities mentioned above:
Submission of Bids:
Noncompetitive bids
Competitive bids
Accepted in full up to $1,000,000 at the average
discount rate of accepted competitive bids
(1) Must be expressed as a discount rate with
two decimals, e.g., 7.10%.
(2) Net long position for each bidder must be
reported when the sum of the total bid
amount, at all discount rates, and the net
long position is $2 billion or greater.
(3) Net long position must be determined as of
one half-hour prior to the closing time for
receipt of competitive tenders.
Maximum Recognized Bid
at a Single Yield
35% of public offering
Maximum Award .
35% of public offering
Receipt of Tenders:
Noncompetitive tenders
Competitive tenders
Payment Terms
Prior to 12:00 noon Eastern Daylight Saving time
on auction day
Prior to 1:00 p.m. Eastern Daylight Saving time
on auction day
Full payment with tender or by charge to a funds
account at a Federal Reserve Bank on issue date
DEPARTMENT
OF
THE
TREASURY
TREASURY
NEWS
OFFICE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASIllNGTON, D.C. - 20220. (202) 622-2960
TESTIMONY OF DAVID A. LIPTON
ASSISTANT SECRETARY FOR INTERNATIONAL AFFAIRS
BEFORE THE SUBCOMMITTEE ON AFRICAN AFFAIRS
SENATE COMMITTEE ON FOREIGN RELATIONS
May 1, 1996
Introduction
Madam Chair, thank you for the opportunity to testify here today on the subject of Africa and our
support for African development. The Treasury Department plays an active role in supporting
Africa, both through our extensive contacts with African economic leaders and our position in the
international financial institutions. The main point I would like to make is that it would be a
mistake to look at Africa and see only the devastating legacy of poverty at a time when some
countries are embracing change - change that we must foster and support.
I would like to begin by speaking about the challenges of African development and then move on
to the role of the international financial institutions.
The African economic record
Any review of African economic developments in the last quarter century could find plenty about
which to be disappointed. The economies of Sub-Saharan Africa declined in the 70s and 80s,
while its population continued to grow. As a result, Africa is the only major region of the world
where poverty has increased in recent years and is expected to continue to increase in the next
decade. The statistics are sobering. Consider:
at present, 220 million people - 40 percent of Africa's population - live on less than a
dollar a day;
in large parts of the continent, a child born today is more likely to be malnourished than go
to primary school and as likely to die by the age of five as to go to secondary school;
an African woman runs a l-in-22 risk of dying from pregnancy-related causes during her
lifetime, compared to a risk of l-in-lO,OOO in Northern Europe;
yet many African countries spend more for military purposes than for education and health
combined. The aggregate financial losses of Africa's thousands of public enterprises in the
early 90s were greater than aggregate spending on health and education;
RR-I045
For press releases, speeches, public schedules and official biographies, call our 24-hOUT fax line at (202) 622-2040
2
one legacy of western efforts to help Sub-Saharan Africa is a regional debt ratio equivalent
to about 83 percent of its GDP, by far the heaviest of any region of the world. If all the
region's export earnings were used to pay outstanding debt and none for current essential
imports, it would still take three years to payoff the debt.
Clearly, Africa runs the risk of being left behind by the world economy. There is little doubt that
it presents the world's most difficult, and perhaps last, developmental challenge.
A new dawn of hope
At the same time, the 90s have brought a new dawn of hope in Africa. The end of the Cold War
has ushered in regional changes that are as profound, in their promise and challenges, as those in
Eastern Europe and the Former Soviet Union. Apartheid has disappeared and the post-colonial
wars in southern Africa have ended. Marxist dictatorships have given way to halting attempts at
democracy. Statist economies are making tentative openings to the marketplace.
A new reality in the donor community is that the amount of foreign aid that governments are
prepared to offer has peaked, and seems likely to decline in coming years.
To prepare for this new era, the United States for some years has been telling our African friends
directly as well as through the international financial institutions that the keys to development will
be (1) to build an economic base that can attract more private resources, and (2) more efficient
targeting and use of resources including development assistance. We also have made it very clear
that development assistance will be focussed on countries demonstrating a strong commitment to
reducing poverty in a context of sound economic and social reform programs.
The message is beginning to be heard. Since the late 1980s, there has been a significant increase
in the pace of economic reform. Fifteen of the 47 countries in Sub-Saharan Africa have averaged
4 to 8 percent growth in the period 1987-1995, which translates into rising per capita incomes.
There is a much greater willingness to open trade systems and encourage private investment.
There has been substantial progress in privatization in such heavily state-dominated economies as
Cote d'Ivoire, Cameroon and Zambia. Front-line U.S. firms like AT&T, Exxon and General
Motors are planning major projects in Africa, and medium-sized U.S. companies are moving in as
well.
At the country level,
Cote d'Ivoire, following the long-overdue CFA franc devaluation in 1994, is taking steps
to liberalize trade and prices. It recorded economic growth of 1.7 percent in 1994 after
years of decline, and is projecting growth of 7 percent in 1996.
3
South Africa's new government has silenced its skeptics by showing a determination to
adopt responsible fiscal and monetary policies to anchor its private investment-led growth
strategy.
Ghana, which started reform earlier, has liberalized trade, prices, and investment rules and
adopted a market-determined exchange rate. As a result, economic growth has averaged
5 percent for 12 years, and the U.S. Corporate Council on Africa reports more interest in
Ghana among its members than in any other country but South Africa.
Uganda began ten years ago to bring its budget under control and liberalized prices, trade,
and investment rules, and adopted a flexible, market-based exchange rate. Real per capita
GDP has grown on average 4 percent per year in the last decade. Investment is 20
percent ofGDP.
Ethiopia adopted a federal democratic structure in 1991 that quieted political tension by
giving dissident regions the opportunity to secede if they wished. Major economic
reforms then were put in place with IMF and World Bank support, and growth exceeded 6
percent per year in 1993-95 compared to minus 5 percent in 1991-92.
On the political front, the number of sub-Saharan countries attempting some measure of
democratic reform has increased from only 4 in 1989 to more than twenty today. Elections, albeit
with some imperfections, have been held in 29 countries.
If it has always been an error to speak of Africa as an undifferentiated whole, that is even more
the case today. The variety of country conditions on this vast continent is greater than ever, and
fortunately many are showing signs of fragile promise.
The path ahead
We in the United States are considering how to nurture that fragile promise, how to adapt our
approaches to the needs and realities of today's Africa. A key step taken by the Administration
was the President's report on Trade and Development Policy for Africa, forwarded to the
Congress on February 5, which presented the Administration's views and proposals. We hope
that Report will be the beginning of a fruitful dialogue with you and your colleagues about how
we can more constructively engage with the countries of Africa.
It seems to me that, at this point, our next step should be to define more precisely our
expectations of Africans and of ourselves in an era of rapid change there and constrained budgets
here. Focussing first on those things Africans will need to do,
We should urge African governments to step away from aid dependency and take a
greater hand in defining and implementing their own development policies and programs.
4
Local ownership translates much more readily into local commitment and support.
African governments must slim down, do less, and do it better. The legitimacy of the
African state, as anywhere, depends on fulfilling key responsibilities well, and leaving the
rest to the private sector. Clearly, one key responsibility is to provide a stable
macroeconomic climate for business and trade. The most sensitive barometer of financial
stability is the exchange rate, because a stable, convertible exchange rate can be achieved
only when state finances are in order. It is encouraging that many African countries have
taken meaningful steps toward convertible exchange rates in the 1990s.
But, stability can only be sustained if structural problems are overcome. Most African
countries have over-regulated and under-produced, with a resulting loss in productivity
and growth. They need to focus instead on providing the services that only government
can provide, such as health, education, and other basic services, and on creating an
environment that encourages private investment.
Africans need to do a better job of creating open, transparent frameworks for private
enterprise. That means open trade and investment rules, open budgetary procedures, open
legal and regulatory regimes. And it means better progress on privatization as a matter of
urgency.
And, Africans need to invest more in human capital, especially in education of women.
The African Development Bank estimates that the return on investment in primary
education in Africa is 26 percent, one of the highest returns available. Better educated
Africans are more effective managers, investors, consumers, and voters. Education of
women pays off in many ways, from more trade to better environmental management to
lower population growth.
Turning now to the things we should ask of ourselves:
We must recognize the growing diversity in Africa by emphasizing the positive. Most of
the attention on Africa has focussed on the disasters like Somalia, Liberia, and Rwanda.
Yet there are a number of countries quietly making remarkable turnarounds, such as
Ethiopia, Mozambique, Eritrea, Benin, Mali, and Senegal. We should continue to nurture
and encourage their efforts.
One of the global lessons of development in recent years is that resource transfer without
political and economic reform is wasted. A lesson we learned in Central Europe and the
Former Soviet Union is how leaders taking advantage of a political window of opportunity
for bold reform can change a nation's destiny. We should be urging African leaders to
take advantage of the opportunities presented by democratic mandates, and we should
help them achieve success.
5
As we provide development assistance, we must give first priority to the people
concerned, by increasing the focus on "human capital" -- primary health care, basic
education, and technical training. Social sector investments complement good economic
management by improving the capacity of Africans to plan and manage their own
development.
We should continue to find innovative ways to mobilize the enormous technical and
financial resources of the American private sector and encourage it to work with its
African counterparts. The private sector's response to African reforms to date has been
rather slow and tentative -- the U.S. has captured only 4 percent of African imports -reflecting concerns about infrastructure and human resource constraints as well as a lack
of confidence in the permanence of reform.
Finally, additional action on debt relief is necessary for the poorest African countries
where debt burdens are a major constraint on their development capacity. The United
States is a strong advocate of timely action by all parties, including the international
financial institutions, to reduce unsustainable commitments from the past and help place
those countries with a demonstrated commitment to economic reform back on a more
sustainable development path.
The international fmancial institutions
The international financial institutions (IFIs) are at the forefront of efforts to promote policy
reform and human resource development in Africa. Looking to the future, Africa will need to rely
more than ever on the collaborative efforts of the International Monetary Fund's Enhanced
Structural Adjustment Facility, the International Development Association, and the African
Development Bank and Fund. These are the iJ:?stitutions providing the major policy guidance,
integrated strategies, and financial support that sustain economic growth and keep reform on
track. The !FIs are advancing U.S. values and interests throughout Africa by (1) providing a key
defense against political and social instability, (2) helping to lay the foundation for the rule of law
and democracy, and (3) expanding opportunities for trade and investment.
Each of these institutions merits strong United States support.
Enhanced Structural Adjustment Facility (ESAF)
1.
The Enhanced Structural Adjustment Facility is the keystone of the International Monetary
Fund s activity in Africa. In a larger sense ESAF is a key to other multilateral and bilateral
assistance in the region, since it brings together the various components of successful
adjustment under one coherent framework and sets the stage for other donors and investors to
perform effectively.
I
£SAF programs establish a medium-term framework for macroeconomic stabilization -- such
6
as reductions in budget deficits -- and free-market reforms designed to unleash the private
sector. ESAF programs create the foundation for the kinds of longer-term efforts supported by
IDA, for example prudent investments in infrastructure development, privatization, and
reforms of financial and agricultural sectors. ESAF loans are on tenns which the poorest
countries can afford, but on conditions that ensure that reforms are put in place. This strict
policy conditionality unlocks infrastructure and development project assistance not only from
IDA, but from other development banks, bilateral lenders, and private sector investors. An
ESAF adjustment program is also the pre-condition for Paris Club debt rescheduling.
About two-thirds of the recipients of ESAF concessional lending are Sub-Saharan African
countries. Over half of ESAF's loan commitments are to this region. Total IMF credit and
loans outstanding at the end of February 1996 amounted to $62.7 billion. Of this amount,
$10.6 billion was to Africa. ESAF's outstanding loans to Sub-Saharan Africa accounted for
$4.35 billion, or 40 percent of the total IMF outstanding lending to Africa.
We attach high priority to our request to authorize the remaining $75 million of the
Administration's $100 million pledge to the subsidy account of ESAF. The subsidy account
permits ESAF concessionallending at the 0.5 percent interest rate that is affordable to poor
countries such as those in Africa. It is a critical support for their efforts to achieve sustainable
growth and to implement market reforms that will move them toward economic independence.
While ESAF loans are provided over an extended period of time, the IMF must be sure, when
it extends such loans, that subsidy resources will be adequate for the entire period of the loan.
Full authorization of the US contribution will help to provide such assurance.
This is a modest contribution from the world's largest economy and an important
demonstration of our continued support for reforms in the region. ESAF will be the vehicle
for the IMF's participation in the multilateral debt initiative and our modest contribution to
ESAF will provide us the leverage we need to influence the direction and content of that
participation as well as all ESAF programs.
2.
The International Development Association
IDA is the premier multilateral development institution assisting Sub-Saharan Africa. U.S.
participation in IDA projects a high degree of U.S. influence internationally and in the World
Bank Group.
IDA is Sub-Saharan Africa's most important source of concessiona11ending. The region could
receive as much as $11 billion in new IDA commitments over the next three years. There are no
"entitlements'" Instead, country allocations are explicitly linked to borrowers' performance in
economic management, poverty reduction, and portfolio implementation.
IDA is in the forefront of efforts to promote open economic reforms. A quarter ofIDA's African
7
projects address such reforms. Twenty African borrowers are currently undertaking IDAsupported reforms in areas such as trade liberalization, privatization, and financial sector reform.
And IDA programs are making a difference: GDP growth is expected to average 5 percent a year
in 1994-96 in these countries.
IDA also provides enormous support for health, education and basic infrastructure -- the
underpinnings of sustainable development. Other key aspects of IDA's multi-faceted
development role in Africa include:
•
aid coordination: IDA leads the Special Program of Assistance which catalyzes and
coordinates funds from 19 donors in support of African economic reform efforts.
•
addressing health emergencies: IDA is the largest source of external finance for
mv/AIDS prevention and control and is a key player in river blindness control efforts in
11 countries.
•
military demobilization: IDA has initiated multi-donor efforts in Uganda, Namibia,
Mozambique and Ethiopia.
•
crisis assistance: IDA is supporting multi-country drought relief, refugee resettlement
(Eritrea), and economic reconstruction (Angola and Rwanda).
The March 23 issue of The Economist, a publication that has not held back its criticisms of
development assistance or of the World Bank, stated that: "IDA is probably the best available
mechanism for effective foreign aid." I agree with this assessment.
Moreover, a comprehensive action program to further strengthen IDA's effectiveness is
underway. Under this program, IDA is intensifying its efforts to:
•
improve lending quality and portfolio performance;
•
deepen support for poverty reduction including essential services;
•
strengthen efforts to promote private sector development;
•
integrate environmental considerations into development programs;
•
increase transparency, accountability and public participation in Bank projects; and
•
improve management efficiency and institutional responsiveness.
IDA's Country Assistance Strategies (CASs) have also evolved into a highly useful management
and oversight tool to enhance IDA's development impact. Each CAS, which is now reviewed by
8
IDA's Executive Board, identifies the most urgently needed and most effective development
interventions for reducing poverty in individual borrowers, and links the amount a country can
borrow to its performance in economic management and poverty reduction.
The recent report of the Development Committee Task Force has also presented a broad
international consensus on how IDA and the other multilateral development banks can most
effectively carry out their mission. The Task Force Report stresses the need for the institutions to
strengthen their evaluation procedures to better determine what works and what does not and
recommends close coordination among all the banks on the design and implementation of country
specific development strategies.
3.
The African Development Bank and Fund
While I can cite some examples of African economic reform efforts that worked with support
from the African Bank Group, our hopes that the Bank would make a decisive contribution to
Africa's development have largely been disappointed. Chronic instability and mismanagement in
many borrowers, coupled with inefficiency and mismanagement inside the institution, undercut the
Bank's efforts.
Two years ago, the United States led other donors in conditioning any new funding on sweeping
reform of Bank administration and practices. In just this short period of time, the institution is
changing dramatically for the better.
•
Leadership: Since he was sworn in last September, President Omar Kabbaj has earned
strong praise for pursuing a vigorous reform agenda;
•
Governance: In the context of the capital increase negotiations, we aim to revamp the
ownership and voting structure of the Bank to achieve increased control for non-regional
members.
•
Management: Twenty percent of Bank staffhave been dismissed; more than two out of
every three managers have been replaced; a comprehensive audit is underway;
•
Policies: A strict new lending policy has been implemented that will keep noncreditworthy borrowers out of market-rate programs; the entire portfolio has been
examined and over $700 million in loans canceled, with more to follow; and a tough new
sanctions policy on arrears has been enacted.
•
Practices: The Bank has created units for procurement, private sector development and
environment; and it is developing a state of the art information disclosure policy and an
inspection function.
9
In sum, the Bank is implementing the most comprehensive and ambitious reform effort ever taken
by an institution of its kind. More needs to be done, and it will take time before all the benefits
appear. Nevertheless, we and the Bank's other non-regional shareholders are convinced that the
Bank is on the right track and that it will soon be positioned to make a strong contribution to
Africa's development.
Debt Relief for the Poorest Countries in Sub-Saharan Africa
Broad and deep debt relief is essential for a number of the poorest countries in Africa. Without a
comprehensive effort to reduce debt to sustainable levels, the debt problems of the poorest
countries will continue to monopolize resources, discourage initiative, and frighten away
investors. The worst possible outcome would be that nascent reforms being carried out by a
newly-elected democratic leader are stifled by the specter that the fruits of reform merely go to
debt service.
To break the negative cycle of overly indebted poor countries and improve their capacity to
develop and grow, the United States and other creditor governments have pledged to reduce
debts owed them by the poorest countries by as much as 67 percent, provided the debtor nation
maintains its reform efforts. Support for the Administration's FY 1997 budget request for debt
reduction is key to our being able to join other creditors in providing debt reduction in the Paris
Club. But creditor governments account for only about one half of these countries' debts;
multilateral institutions account for about one-third of the total debts. For a number of these
countries, debt burdens will not be sustainable even after 67 percent debt reduction in the Paris
Club.
Uganda and Mozambique are examples of countries undertaking economic reforms that will
continue to face unsustainable burdens even if reforms are successful and debt relief is provided
by creditor governments under current mechanisms. Mozambique would have to dedicate the
equivalent of 10 years export earnings to payoff its outstanding debt.
The 1995 G-7 Halifax Summit called on the Th1F and World Bank to develop a comprehensive
approach to address multilateral debt burdens of the poorest countries. We are working with the
institutions to determine appropriate debt relief measures by the multilateral institutions,
recognizing that Paris Club and other creditors may also have to do more.
u.S. Participation at a Crossroads
I believe the international fmancial institutions are major assets which advance U.S. foreign
and economic policy interests in Africa and elsewhere around the world. In today' s
increasingly interdependent world, they are a cost-effective investment in our own future.
There were deep funding cuts in IDA, the accounts of other international fmandal institutions,
10
and debt programs in FY 1996 -- 51 percent below the Administration's request and 38 percent
below the FY 1995 appropriated level. This has contributed to a backlog of overdue U. S.
commitments amounting to $1.5 billion.
I am seriously concerned regarding the adverse impact that these sharp reductions in U.S.
funding for IDA and the other international fmancial institutions will have on U.S. leadership
in world affairs and on the ability of the institutions to carry out their vital roles.
For FY 1997, the Administration is requesting authorization and appropriations for U. S.
participation in ESAF, IDA, and the African Development Bank and Fund.
•
ESAF
authorization of $75 million is requested for the outstanding U.S. pledge to the
ESAF.
an appropriation of $7 million is requested toward this amount.
•
IDA
authorization of $550 million is requested to meet the remainder of our
outstanding commitment to IDA's tenth replenishment (IDA-I0).
an appropriation of $934.5 million is requested to meet the full amount of
outstanding and overdue U.S. commitments to IDA-10.
this does not include any new U.S. funding for IDA-ll, effectively delaying
U.S. participation in a new IDA replenishment by one year.
•
African Development Bank and Fund
authorization of $135 million is requested for the paid-in portion of a new U.S.
capital subscription to the African Development Bank.
an appropriation of $16 million is requested for the fIrst U.S. payment to the
capital subscription.
an appropriation of $50 million is requested as the initial payment of a proposed
$200 million U. S. share in the replenishment of the African Development Fund,
which was previously authorized.
11
•
Debt reduction
$22 million is requested for poorest country debt reduction at the Paris Club.
The Administration is also requesting authorization of $52.5 million for the first of five
installments for U.S. participation in the Bank for Economic Cooperation and Development in
the Middle East and North Africa. This institution will promote economic cooperation,
integration, and private-sector investment and is an essential component of the Middle East
Peace Process.
We hope to work with you and your colleagues over the coming year to build the necessary
support to meet our existing funding commitments to, and remain effectively engaged in, these
important international institutions.
PUBLIC DEBT NEWS
Department of the TreasuIY • Bureau of the Public Debt
FOR IMMEDIATE RELEASE
May 1, 1996
BUREAU OF THE PUBLIC DEBT ANNOUNCES SAVINGS BOND RATES
FOR MAY THROUGH OCTOBER 1996
The Bureau of the Public Debt today announced the market-based rates for U.S. Savings Bonds for May
through October 1996.
SHORT-TERM SAVINGS BOND RATE 4.36 %
The 4.36 percent short-term rate is 85 percent of the average of six-month Treasury security yields for
February through April 1996. A new rate is announced each May 1 and November 1. Series EE bonds
issued on or after May 1, 1995, earn the short-term rates for semi-annual interest accrual periods beginning
on or after each announcement date for the first five years.
LONG-TERM SAVINGS BOND RATE 4.85%
The 4.85 percent long-term rate is 85 percent of the average of five-year Treasury security yields for
November 1995 through April 1996. Series EE bonds issued on or after May 1, 1995, earn long-term rates
from five years through 17 years. Since none of the bonds issued under the new rate structure have been
outstanding for five years, the long-term rate in this announcement will not be used and is provided only
for reference.
FIVE YEAR TREASURY SECURITIES YIELD 5.70%
The average five-year Treasury securities yield applicable for earning periods from May through October
1996 period is 5.70 percent. In general, the market-based variable investment yield is 85 percent of the
average of the average five-year Treasury security yields for the applicable six-month periods. Series EE
bonds issued before May 1, 1995 along with Series E bonds and savings notes that have been outstanding
for five years or longer and have not reached final maturity continue to earn market-based variable yields
or their guaranteed minimum yields, whichever produces the greater value.
SERIES HAND HH BOND RATE 4.00%
Series Hand HH bonds issued or entering an extended maturity period since March 1, 1993, pay interest
semiannually at a fixed rate of 4 percent per annum.
MATURED SERIES E SAVINGS BONDS
Series E bonds issued May 1956 and earlier have reached final maturity and no longer earn interest. Bonds
issued from June 1956 through October 1956 stop earning interest June 1, 1996 through October 1, 1996,
or forty years from the issue date. Series E bonds issued December 1965 through May 1966 have reached
their final maturity of 30 years and no longer earn interest. Bonds with issue dates of June 1966 through
October 1966 stop earning interest June 1, 1996 through October 1, 1996 respectively.
The table on the reverse of this bulletin shows actual yields for Series EE bonds. The savings bond
regulations, 31 CFR Part 351, contain detailed information.
PA-219
(RR-1046)
000
REDEMPTION VALUES AND YIELDS FOR
$100 SERIES EE BONDS -- MAY 1996 THROUGH APRIL
This table shows semiannual redemption values for $100 Series EE Bonds·
to the values shown.
1997
Values for other denominations are proportional
For example, the value of a $50 bond IS one-half the amount shown and the value of a $500 bond is
five times the amount shown. The Earnings column shows the annual yield that the bonds will earn during the period indicated
The Yield From Issue Oate is the bond's yield from its issue date to the date shown or date adjusted as shown in the footnotes
AdditIOnal information may be obtained from the Bureau of the Public Oebt, 200 Third Street, Parkersburg, WV 26106-1328.
Series EE Bond
Issue Dates
Value as of
5/95 thru 10/95
11/94 thru 4/95
Amount
5/1/96
50.00
5/1/96
432%
4.32%
51 20
5/1/96
5/1/96
4.37%
11/1/96
11/1/96
51.08
5/1/96
52.32
4.59%
4.42%
11/1/96
53.68
479%
4.07%
54.16
404%
3.99%
11/1/96
11/1/96
55.24
403%
3.91%
11/1/96
56.32
4.01%
3.98%
11/1/96
3/1/97
11/1/96
57.44
4.00%
58.60
4.01%
62.12
550%
64.56
5.76%
67.20
600%
69.24
601%
71.32
73.44
6.00%
75.64
6.00%
77.92
6.00%
5/1/96
52.52
53.08
5/94 thru 10/94
5/1/96
5/1/96
54.16
11/93 thru 4/94
5/1/96
55.24
5/93 thru 10/93
3/93 thru 4/93
11/92 thru 2/93
5/1/96
9/1/96
5/1/96
56.32
5/92 thru 10/92
11/91 thru 4/92
5/1/96
5/1/96
62.12
64.56
5/91
11/90
5/90
11/89
5/89
11/88
5/88
67.20
thru 10/88
511/96
5/1/96
5/1/96
5/1/96
5/1/96
5/1/96
5/1/96
11/87 thru 4/88
5/87 thru 10/87
5/1/96
5/1/96
84.40
11/86 thru 4/87
5/86 thru 10/86
10444
11/85 thru 4/86
5/1/96
51.1/96
5/1/96
5/85 thru 10/85
5/1/96
10868
11/84 thru 4/85
5/84 thru 10/84
5/1/96
5/1/96
110.84
11/83
5/83
3/83
11/82
5/82
11/81
5/81
5/1/96
511/96
9/1/96
116.64
thru 10/91
thru 4/91
thru 10/90
thru 4/90
thru 10/89
thru 4/89
thru 4/84
thru 10/83
thru 4/83
th ru 2183
thru 10/82
thru 4/82
th ru 10/81
11/80 thru 4/81
5/80 thru 10/80
1/80 thru 4/80
Value and Yield From Issue Date
Date··
Amount
Yield
Date ... •
-5/96 thru 10/96
11/95 th ru 4196
Semiannual Earnings
Period beoins** yield· ... •
5/1/96
511/96
5/1/96
5/1/96
5/1/96
5/1/96
7/1/96
57.44
5996
69.24
71.32
73.44
7564
77.92
80.24
87.04
89.72
106.56
113.08
12156
128.44
12848
144.20
148.52
152.96
161.40
17440
177.88
5/1/96
5/1/96
5/1/96
5/1/96
9/1/96
5/1/96
5/1/96
5/1/96
5/1/96
5/1/96
5/1/96
5/1/96
5/1/96
5/1/96
5/1/96
5/1/96
5/1/96
5/1/96
5/1/96
5/1/96
5/1/96
5/1/96
5/1/96
5/1/96
5/1/96
9/1/96
5/1/96
5/1/96
5/1/96
5/1/96
5/1/96
5/1/96
7/1/96
4.04%
7.20%
7.86%
818%
6.07%
6.01%
5.95%
5.99%
6.03%
5.95%
6.08%
1.80%
1.47%
1.34%
406%
3.98%
397%
4.04%
3.96%
4.80%
5.07%
4.86%
5.98%
599%
5.98%
601%
6.00%
601%
5.98%
11/1/96
11/1/96
11/1/96
11/1/96
11/1/96
11/1/96
11/1/96
11/1/96
11/1/96
11/1/96
11/1/96
11/1/96
11/1/96
11/1/96
11/1/96
11/1/96
11/1/96
11/1/96
11/1/96
3/1/97
11/1/96
11/1/96
11/1/96
11/1/96
11/1/96
11/1/96
1/1/97
6.01%
80.24
6.00%
82.68
601%
85.16
87.68
6.00%
6.01%
90.32
600%
106.56
7.34%
108.68
7.18%
110.84
7.04%
113.08
6.92%
11532
6.80%
119.44
6.81%
124.64
688%
131.56
7.03%
132.32
7.07%
148.52
7.65%
152.96
760%
15756
754%
166.24
179.64
765%
183.20
779%
7.90%
• Monthly increases in value, applicable to some bonds issued prior to May 1995, are not shown in the table .
•• The dates shown are for the first issue date of the range in the first column. Add one month for each later issue month. For
example. a bond issued in 07/95 (two months after the first date in the range) would be worth the amount shown two month
after the date listed The six-month earning period would begin two months later than the date shown .
... Yields and savings bond rates may not agree due to rounding and due to the methodology for computing market-based yield
for bonds Issued prior to May 1, 1995
DEPARTMENT
OF
THE
TREASURY
NEWS
lREASURY
OFFlCE OFPUBUCAFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASHINGTON, D.C. - 20220 - (202) 622-2960
FOR IMMEDIATE RELEASE
May 1, 1996
REMARKS BY DARCY BRADBURY
ASSISTANT SECRETARY FOR FINANCIAL MARKETS
TREASURY QUARTERLY REFUNDING PRESS CONFERENCE
Good afternoon. I will begin with today's refunding announcement and then I will
discuss modifications in the Treasury's longer range borrowing plans.
1.
We are offering $46.0 billion of notes and cash management bills to refund
$35.0 billion of privately held notes maturing on May 15 and to raise approximately $11.0
billion of cash.
The three securities are:
First, a 3-year note in the amount of $19.0 billion, maturing on May 15, 1999. This
note is scheduled to be auctioned on a yield basis at 1:00 p. m. Eastern time on
Tuesday, May 7, 1996. The minimum purchase amount will be $5,000 and purchases
above $5,000 may be made in multiples of $1,000.
Second, a 10-year note in the amount of $14.0 billion, maturing on May 15, 2006.
This note is scheduled to be auctioned on a yield basis at 1:00 p.m. Eastern time on
Wednesday, May 8. The minimum purchase amount will be $1,000.
Third, a 36-day cash management bill in the amount of $13.0 billion, maturing on
June 20, 1996. This bill is scheduled to be auctioned on a yield basis at 1:00 p.m.
Eastern time on Thursday, May 9. The minimum purchase amount will be $10,000.
-MORERR-1047
Far press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
2
2.
As announced on Monday, April 29, we estimate a net paydown of marketable
securities of $20 billion for the April-June quarter. The estimate assumes a $35 billion cash
balance at the end of June and takes into account the fact that the 2- and 5-year notes to
refund the notes maturing on June 30 will be issued on July 1. Including the securities in this
refunding, we have paid down $27.9 billion in sales of marketable securities. This was
accomplished as follows:
raised $4.9 billion from the 2-year notes issued on April 10 and April 30;
raised $9.1 billion from the 5-year notes issued on April 10 and April 30;
raised $2.9 billion from the 52-week bills with issue dates of April 4 and May 2;
paid down $9.7 billion in cash in the regular weekly bills, including those announced
yesterday;
paid down $7.8 billion in the 7-year note that matured on April 15;
paid down $38.3 billion in cash management bills that matured on April 18 and April
25, combined; and
raised 11.0 billion from the notes and bills that I am announcing today.
3.
The Treasury will need to raise $20.8 billion in market borrowing during the
rest of the April-June quarter. This financing can be accomplished through regular sales of
13-, 26-, and 52-week bills in May and June and 2- and 5-year notes in May. Additional
cash management bills will be needed to cover the low point in the cash balance in early
June. Since the cash management bill being announced today will mature on June 20, it will
not affect the total borrowing need for the quarter.
4.
We estimate Treasury net market borrowing to be in a range of $55 billion to
$60 billion for the July-September quarter, assuming a $40 billion cash balance on September
30.
5.
Now I will discuss the broader borrowing strategy. Today, the Treasury is
announcing that it is increasing the frequency of auctions of lO-year notes to six times per
year and of 30-year bonds to three times per year, while decreasing the size of each auction
somewhat. These changes in the Treasury borrowing schedule will mean that Treasury
borrowing will more closely match the Treasury's need for funds, without any significant
impact on the maturity mix of Treasury borrowing.
3
The new schedule will be as follows:
the six issues of 10-year notes each year will occur in the regular midquarter
refunding operations and on July 15 and October 15;
the July 15 and October 15 10-year notes will have July 15 and October 15 maturity
dates, unless those issues were reopenings of outstanding midquarter refunding
securities;
the new issue sizes for the February and May lO-year notes be could be somewhat
larger than those in the second half of the calendar year, since they will be the only
10-year issues in those quarters; and
the three issues of 30-year bonds each year will occur in the February 15, August 15,
and November 15 midquarter refunding operations.
The Treasury has sold lO-year notes in regular midquarter refunding offerings since
May 15, 1980. The 30-year bonds were offered in regular quarterly refundings between
1977 and May 1993, and they have been offered twice each year since August 1993. The
size of each 10-year note and 3D-year bond issue has grown. With the reductions in the
frequency of 30-year bonds to two auctions per year and the elimination of 7-year note
auctions, the Treasury's intermediate and longer term borrowing have become increasingly
bunched. The attached charts show the growth in 10- and 30-year auction sizes from 1986 to
the present.
While offering six 10-year notes and three 30-year bonds each year, the Treasury will
reduce the size of each auction somewhat from current levels so that total annual issuance in
future years will not change significantly from the levels that otherwise would have been
necessary. The larger number of somewhat smaller auctions will improve Treasury's cash
management, as well as spread out our exposure to unusual market conditions, without
compromising the market liquidity of individual notes and bonds. Also, the somewhat
smaller auctions held closer together should enhance the Treasury's ability to reopen issues.
The added maturity and coupon dates will also open more possibilities for stripping.
The new issues have been added to the borrowing schedule in the second half of the
calendar year, when the Treasury's seasonal borrowing requirements are relatively large.
The schedule for the new issues was also matched with the maturity dates of the old 7-year
notes and the midquarter refunding maturity dates. The decision we are announcing today
concerning the Treasury's longer term borrowing strategy is consistent with the mix of new
issues of marketable securities that the Treasury announced in May 1993 and is not expected
to alter the average life of the Treasury debt to any significant degree. Today's decision also
takes into account the smaller Federal budget deficits that are forecast today, compared with
those estimated in 1993, as shown in the chart that is also attached.
6.
The tentative auction calendars for May, June, and July are included in the
chart package that was distributed today.
4
7.
Finally, I want to encourage market participants who bid in Treasury auctions
to attend a seminar on compliance with Treasury auction rules either Thursday or Friday of
this week. The seminars will be held at the Public Securities Association headquarters in
New York City, beginning at 8:45 a.m. Market participants, Public Securities Association
representatives, and Treasury staff will answer questions that are asked frequently about the
rules and their enforcement. Similar seminars have already been held in April in Chicago
and San Francisco. For more information, you may contact the Public Securities
Association.
8.
The August midquarter refunding press conference is scheduled to be held on
Wednesday, July 31.
Thank you, and now I would be happy to answer questions.
NET MARKET BORROWING NEEDS
Forecasts in 1993 and 1996
$Bil.'r------------------------------,
January 1993
Budget Forecast
.....
::::::::::
6]
..........
-50'
1993
1994
1995
1996
1997
1998
Fiscal Years
Actuals used for FY 1993 Department of the TreBsury
Office of Marl<et Finance
1999
March 1996
Actuals/Forecast
2000
1995 portion of March 1996 forecast
2001
2002
10 YEAR NOTE OFFERINGS·
$Bil.~
14 I-
D
November
rU]
February
•
May
~
~ $Bil.
August
r:J
14
12
12
10
10
8
8
6
6
4
4
2
2
o
1986
1987
1988
1989
1990
1991
1992
Fiscal Years
* Announced Amounts
Depertment of the TrS8SUlY
Office of Market Finance
1993
1994
1995
1996
0
30 YEAR BOND OFFERINGS·
$~:~
l"f~j
November
1))1
February
•
May
~
August
~~:iI.
12
12
10
10
8
8
6
6
4
4
2
2
o
1986
1987
1988
1989
1990
1991
1992
1993
Fiscal Years
* Announced Amounts
** Reopened a prior issue; bond limit reached.
Department of the Treasury
Office of Market Finance
1994
1995
1996 0
UEPARTl\'lENT
OF
THE
TREASURY
NEWS
TREASURY
omCE OF PUBliC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASlllNGTON, D.C .• 20220. (202) 622.2960
FOR RELEASE WHEN AUTHORIZED AT PRESS CONFERENCE
May I, 1996
CONTACT: Office of Financing
202-219-3350
TREASURY MAY QUARTERLY FINANCING
The Treasury will auction $19,000 million of 3-year notes
and $14,000 million of 10-year notes to refund $35,048 million of
publicly-held securities maturing May IS, 1996, and to pay down
about $2,050 million. The Treasury will also auction a 36-day
cash management bill on May 9, 1996. Details about the cash
management bill are given in a separate announcement.
In
Federal
million
issuing
addition to the public holdings, Government accounts and
Reserve Banks, for their own accounts, hold $4,302
of the maturing securities that may be refunded by
additional amounts of the new securities.
The maturing securities held by the public include $2,193
million held by Federal Reserve Banks as agents for foreign
and international monetary authorities. Amounts bid for these
accounts by Federal Reserve Banks will be added to the offering.
The 10-year note being offered today is eligible for the
STRIPS program.
Tenders will be received at Federal Reserve Banks and
Branches and at the Bureau of the Public Debt, Washington, D. C.
This offering of Treasury securities is governed by the terms and
conditions set forth in the Uniform Offering Circular (31 CFR
Part 356) for the sale and issue by the Treasury to the public
of marketable Treasury bills, notes, and bonds.
Details about the notes are given in the attached offering
highlights.
000
Attachment
RR-1048
Fur press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
HIGHLIGHTS OF TREASURY OFFERINGS TO THE PUBLIC
MAY 1996 QUARTERLY FINANCING
Hay "
Offerinq Amount
$19,000 million
$14,000 million
3-year notes
X-1999
912827 Xl 2
May 7, 1996
Hay 15, 1996
Hay 15, 1996
Hay 15, 1999
Determined based on the average
of accepted competitive bids
Determined at auction
November 15 and May 15
10-year notes
B-2006
912827 X8 0
May 8, 1996
Hay 15, 1996
Hay 15, 1996
Hay 15, 2006
Determined based on the average
of accepted competitive bids
Determined at auction
November 15 and Hay 15
$5,000
$1,000
51,000
51,000
None
Determined at auction
None
Determined at auction
Not applicable
Not appl icable
Determined at auction
912820 BS 5
Not appl i cabl e
Not applicable
1996
Description of Offerinq:
Term and type of security
Series
CUSIP nl.ri>er
Auction date
Issue date
Dated date
Maturi ty date
Interest rate
'field
Interest payment dates
Minimum bid amount
Multiples
Accrued interest payable
by investor
Premium or discount
STRIPS Information:
Minimum amount required
Corpus CUSIP number
Due dates and CUSIP numbers
for additional TINTs
The following rules apply to all securities mentioned above:
Submission of Bids:
Noncompetitive bids
Competitive bids
Maximum
at a
Maximum
Receipt
Recornized Bid
Sing e Yield
Award . . . . .
of Tenders:
Noncompetitive tenders
Competitive tenders.
Payment Terms . . . . .
Accepted in full up to $5,000,000 at the average yield of accepted competitive bids.
(1) Hust be expressed as a yield with three decimals, e.g., 7.123%.
(2) Net long position for each bidder must be reported when the sum of the total bid amount,
at aLL yields, and the net long position is $2 biLLion or greater_
(3) Net Long position must be determined as of one half-hour prior to the cLosing time
for receipt of competitive tenders.
35~ of pubLic offering
35% of public offering
Prior to 12:00 noon Eastern Daylight Saving time on auction day
Prior to 1:00 p.m. Eastern Daylight Saving time on auction day
Full payment with tender or by charge to a funds account at a Federal Reserve Bank on issue date
DEPARTl\IENT
OF
THE
TREASURY
NEWS
omCE OF PUBliC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C.• 20220. (202) 622.2960
FOR RELEASE WHEN AUTHORIZED AT PRESS CONFERENCE
May 1, 1996
CONTACT: Office of Financing
202/219-3350
TREASURY TO AUCTION CASH MANAGEMENT BILLS
The Treasury will auction approximately $13,000
million of 36-day Treasury cash management bills to be
issued May 15,1996.
Competitive and noncompetitive tenders will be
received at all Federal Reserve Banks and Branches.
Tenders will not be accepted for bills to be maintained on
the book-entry records of the Department of the Treasury
(TREASURY DIRECT). Tenders will not be received at the
Bureau of the Public Debt, Washington, D.C.
Additional amounts of the bills may be issued to
Federal Reserve Banks as agents for foreign and
international monetary authorities at the average price of
accepted competitive tenders.
This offering of Treasury securities is governed by
the terms and conditions set forth in the Uniform Offering
Circular (31 CFR Part 356) for the sale and issue by the
Treasury to the public of marketable Treasury bills, notes,
and bonds.
Details about the new security are given in the
attached offering highlights.
000
Attachment
RR-I049
FfN press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622·2040
HIGHLIGHTS OF TREASURY OFFERING
OF 36-DAY CASH MANAGEMENT BILL
May 1, 1996
Offering Amount .
. .
. $13,000 million
. .
Description of Offering:
Term and type of security
CUSIP number
Auction date
Issue date
Maturity date
Original issue date
Currently outstanding
Minimum bid amount
Multiples . . . . . .
Minimum to hold amount
Multiples to hold
36-day Cash Management Bill
912794 Z4 9
May 9, 1996
May 15, 1996
June 20, 1996
December 21, 1995
$27,607 million
$10,000
$1,000
$10,000
$1,000
Submission of Bids:
Noncompetitive bids
Competitive bids
(1)
(2.)
(3 )
Accepted in full up to $1,000,000 at
the average discount rate of accepted
competitive bids
Must be expressed as a discount rate
with two decimals, e.g., 7.10%.
Net long position for each bidder must
be reported when the sum of the total
bid amount, at all discount rates, and
the net long position is $2 billion or
greater.
Net long position must be determined
as of one half-hour prior to the
closing time for receipt of competitive tenders.
Maximum Recognized Bid
at a Single Yield
35% of public offering
Maximum Award . .
35% of public offering
.
Receipt of Tenders:
Noncompetitive tenders
Prior to 12:00 noon Eastern Daylight
Saving time on auction day
Competitive tenders . . . . Prior to 1:00 p.m. Eastern Daylight
Saving time on auction day
Payment Terms .
.
.
. . .
. Full payment with tender or by charge
to a funds account at a Federal
Reserve Bank on issue date
DEPARTlVlENT
OF
THE
TREASURY
NEWS
OFFICE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASlllNGTON, D.C .• 20220. (202) 622.2960
FOR IMMEDIATE RELEASE
May 1, 1996
RE~SBYDARCYBRADBURY
ASSISTANT SECRETARY FOR FINANCIAL MARKETS
TREASURY QUARTERLY REFUNDING PRESS CONFERENCE
Good afternoon. I will begin with today's refunding announcement and then I will
discuss modifications in the Treasury's longer range borrowing plans.
1.
We are offering $46.0 billion of notes and cash management bills to refund
$35.0 billion of privately held notes maturing on May 15 and to raise approximately $11.0
billion of cash.
The three securities are:
First, a 3-year note in the amount of $19.0 billion, maturing on May 15, 1999. This
note is scheduled to be auctioned on a yield basis at 1:00 p.m. Eastern time on
Tuesday, May 7, 1996. The minimum purchase amount will be $5,000 and purchases
above $5,000 may be made in multiples of $1,000.
Second, a 10-year note in the amount of $14.0 billion, maturing on May 15, 2006.
This note is scheduled to be auctioned on a yield basis at 1:00 p. m. Eastern time on
Wednesday, May 8. The minimum purchase amount will be $1,000.
Third, a 36-day cash management bill in the amount of $13.0 billion, maturing on
June 20, 1996. This bill is scheduled to be auctioned on a yield basis at 1:00 p.m.
Eastern time on Thursday, May 9. The minimum purchase amount will be $10,000.
-MORERR-1047
F()1' press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622·2040
2
2.
As announced on Monday, April 29, we estimate a net paydown of marketable
securities of $20 billion for the April-June quarter. The estimate assumes a $35 billion cash
balance at the end of June and takes into account the fact that the 2- and 5-year notes to
refund the notes maturing on June 30 will be issued on July 1. Including the securities in this
refunding, we have paid down $27.9 billion in sales of marketable securities. This was
accomplished as follows:
raised $4.9 billion from the 2-year notes issued on April lO and April 30;
raised $9.1 billion from the 5-year notes issued on April 10 and April 30;
raised $2.9 billion from the 52-week bills with issue dates of April 4 and May 2;
paid down $9.7 billion in cash in the regular weekly bills, including those announced
yesterday;
paid down $7.8 billion in the 7-year note that matured on April 15;
paid down $38.3 billion in cash management bills that matured on April 18 and April
25, combined; and
raised 11. 0 billion from the notes and bills that I am announcing today.
3.
The Treasury will need to raise $20.8 billion in market borrowing during the
rest of the April-June quarter. This financing can be accomplished through regular sales of
13-, 26-, and 52-week bills in May and June and 2- and 5-year notes in May. Additional
cash management bills will be needed to cover the low point in the cash balance in early
June. Since the cash management bill being announced today will mature on June 20, it will
not affect the total borrowing need for the quarter.
4.
We estimate Treasury net market borrowing to be in a range of $55 billion to
$60 billion for the July-September quarter, assuming a $40 billion cash balance on September
30.
5.
Now I will discuss the broader borrowing strategy. Today, the Treasury is
announcing that it is increasing the frequency of auctions of lO-year notes to six times per
year and of 30-year bonds to three times per year, while decreasing the size of each auction
somewhat. These changes in the Treasury borrowing schedule will mean that Treasury
borrowing will more closely match the Treasury's need for funds, without any significant
impact on the maturity mix of Treasury borrowing.
3
The new schedule will be as follows:
the six issues of 10-year notes each year will occur in the regular midquarter
refunding operations and on July 15 and October 15;
the July 15 and October 15 10-year notes will have July 15 and October 15 maturity
dates, unless those issues were reopenings of outstanding midquarter refunding
securities;
the new issue sizes for the February and May lO-year notes be could be somewhat
larger than those in the second half of the calendar year, since they will be the only
10-year issues in those quarters; and
the three issues of 30-year bonds each year will occur in the February 15, August 15,
and November 15 midquarter refunding operations.
The Treasury has sold 10-year notes in regular midquarter refunding offerings since
May 15, 1980. The 30-year bonds were offered in regular quarterly refundings between
1977 and May 1993, and they have been offered twice each year since August 1993. The
size of each 10-year note and 30-year bond issue has grown. With the reductions in the
frequency of 30-year bonds to two auctions per year and the elimination of 7-year note
auctions, the Treasury's intermediate and longer term borrowing have become increasingly
bunched. The attached charts show the growth in 10- and 30-year auction sizes from 1986. to
the present.
While offering six 10-year notes and three 30-year bonds each year, the Treasury will
reduce the size of each auction somewhat from current levels so that total annual issuance in
future years will not change significantly from the levels that otherwise would have been
necessary. The larger number of somewhat smaller auctions will improve Treasury's cash
management, as well as spread out our exposure to unusual market conditions, without
compromising the market liquidity of individual notes and bonds. Also, the somewhat
smaller auctions held closer together should enhance the Treasury's ability to reopen issues.
The added maturity and coupon dates will also open more possibilities for stripping.
The new issues have been added to the borrowing schedule in the second half of the
calendar year, when the Treasury's seasonal borrowing requirements are relatively large.
The schedule for the new issues was also matched with the maturity dates of the old 7-year
notes and the midquarter refunding maturity dates. The decision we are announcing today
concerning the Treasury's longer term borrowing strategy is consistent with the mix of new
issues of marketable securities that the Treasury announced in May 1993 and is not expected
to alter the average life of the Treasury debt to any significant degree. Today's decision also
takes into account the smaller Federal budget deficits that are forecast today, compared with
those estimated in 1993, as shown in the chart that is also attached.
6.
The tentative auction calendars for May, June, and July are included in the
chart package that was distributed today.
4
7.
Finally, I want to encourage market participants who bid in Treasury auctions
to attend a seminar on compliance with Treasury auction rules either Thursday or Friday of
this week. The seminars will be held at the Public Securities Association headquarters in
New York City, beginning at 8:45 a.m. Market participants, Public Securities Association
representatives, and Treasury staff will answer questions that are asked frequently about the
rules and their enforcement. Similar seminars have already been held in April in Chicago
and San Francisco. For more information, you may contact the Public Securities
Association.
8.
The August midquarter refunding press conference is scheduled to be held on
Wednesday, July 31.
Thank you, and now I would be happy to answer questions.
NET MARKET BORROWING NEEDS
Forecasts in 1993 and 1996
$BiI.rl- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - .
January 1993
Budget Forecast
ml March 1996
~ Actuals/Forecast
-50
I
1993
1994
1995
1996
1997
1998
Fiscal Years
Actuals used for FY 1993 Department of the Treasury
Office of Market Finance
1999
2000
1995 portion of March 1996 forecast
2001
2002
10 YEAR NOTE OFFERINGS·
$BiI. ~
14 ;
D
November
IHHI
February
•
May
~
~ $Bil.
August
n
-
14
12
12
10
10
8
8
6
6
4
4
2
2
o
1986
1987
1988
1989
1990
1991
1992
Fiscal Years
• Announced Amounts
Department of the Treasury
Office 01 Mamet Finance
1993
1994
1995
1996
0
30 YEAR BOND OFFERINGS·
$~:~
i$:~lil
November
ntl
February
•
May
~
August
~~~iI.
12
12
10
10
8
8
6
6
4
4
2
2
o
1986
1987
1988
1989
1990
1991
1992
1993
Fiscal Years
* Announced Amounts
** Reopened a prior issue; bond limit reached.
Depat1mant of the Treasury
Office of Market Finance
1994
1995
1996
0
D EPA R T J\;I E N T
() F
THE
T REA SUR Y
NEWS
OFFICE OF PUBUC AFFAIRS -1500 PENNSYLVANIA AVENUE, N.W. - WASlHNGTON, D.C. - 20220 - (202) 622·2960
FOR RELEASE WHEN AUTHORIZED AT PRESS CONFERENCE
May 1, 1996
CONTACT: Office of Financing
202-219-3350
TREASURY MAY QUARTERLY FINANCING
The Treasury will auction $19,000 million of 3-year notes
and $14,000 million of 10-year notes to refund $35,048 million of
publicly-held securities maturing May 15, 1996, and to pay down
about $2,050 million.
The Treasury will also auction a 36-day
cash management bill on May 9, 1996. Details about the cash
management bill are given in a separate announcement.
In
Federal
million
issuing
addition to the public holdinys, Government accounts and
Reserve Banks, for their own accounts, hold $4,302
of the maturing securities that may be refunded by
additional amounts of the new securities.
The maturing securities held by the public include $2,193
million held by Federal Reserve Banks as agents for foreign
and international monetary authorities. Amounts bid for these
accounts by Federal Reserve Banks will be added to the offering.
The 10-year note being offered today is eligible for the
STRIPS program.
Tenders will be received at Federal Reserve Banks and
Branches and at the Bureau of the Public Debt, Washington, D. C.
This offering of Treasury securities is governed by the terms and
conditions set forth in the Uniform Offering Circular (31 CFR
Part 356) for the sale and issue by the Treasury to the public
of marketable Treasury bills, notes, and bonds.
Details about the notes are given in the attached offering
highlights.
000
Attachment
RR-I048
Fm- press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
HIGHLIGHTS OF TREASURY OFFERINGS TO THE PUBLIC
MAY 1996 QUARTERLY FINANCING
May 1, 1996
Offering Amount
$19,000 million
$14,000 million
3-year notes
912827 X7 2
May 7, 1996
May 15, 1996
May 15, 1996
May 15, 1999
Determined based on the average
of accepted competitive bids
Determined at auction
November 15 and May 15
10-year notes
B-2006
912827 x8 0
May 8, 1996
May 15, 1996
May 15, 1996
May 15, 2006
Determined based on the average
of acce~terl competitive bids
Determined at auction
November 15 and May 15
$5,000
$1,000
$1,000
$1,000
None
Determined at auction
None
Determined at auction
Not applicable
Not applicable
Determined at auction
912820 BS 5
Not appl icable
Not appl icable
Description of Offering:
Term and type of security
Series
CUSIP number
Auction date
Issue date
Dated date
Maturity date
Interest rate
Yield
Interest payment dates
Minimum bid amount
Multiples
Accrued interest payable
by investor
Premium or discount
X-1999
STRIPS Information:
Minimum amount required
Corpus CUSIP number
Due dates and CUSIP numbers
for additional TINTs
The following rules apply to all securities mentioned above:
SubmlSSlon of Bids:
Noncompetitive bids
Competitive bids
MaXlmum
at a
MaXlmum
Receipt
Recognized Bid
Single Yield
Award . . . . .
of Tenders:
Noncompetitive tenders
Competitive tenders
Payment Terms . . . . .
Accepted in full up to $5,000,000 at the average yield of accepted competitive bids.
(1) Must be expressed as a yield with three decimals, e.g., 7.123%.
(2) Net long position for each bidder must be reported when the sum of the total bid amount,
at all yields, and the net long position is $2 billion or greater.
(3) Net long position must be determined as of one half-hour prior to the closing time
for receipt of competitive tenders.
35% of public offering
35% of public offering
Prior to 12:00 noon Eastern Daylight Saving time on auction day
Prior to 1:00 p.m. Eastern Daylight Saving time on auction day
Full payment with tender or by charge to a funds account at a Federal Reserve Bank on issue date
DEPARTMENT
OF
THE
TREASURY
NEWS
omCE OF PUBUC AFFAIRS • 1500 PENNSYLVANIA AVENUE, N.W.• WASHINGTON, D.C .• 20220 • (202) 622-2960
FOR RELEASE WHEN AUTHORIZED AT PRESS CONFERENCE
May 1, 1996
CONTACT: Office of Financing
202/219-3350
TREASURY TO AUCTION CASH MANAGEMENT BILLS
The Treasury will auction approximately $13,000
million of 36-day Treasury cash management bills to be
issued May 15, 1996.
Competitive and noncompetitive tenders will be
received at all Federal Reserve Banks and Branches.
Tenders will not be accepted for bills to be maintained on
the book-entry records of the Department of the Treasury
(TREASURY DIRECT).
Tenders will not be received at the
Bureau of the Public Debt, Washington, D.C.
Additional amounts of the bills may be issued to
Federal Reserve Banks as agents for foreign and
international monetary authorities at the average price of
accepted competitive tenders.
This offering of Treasury securities is governed by
the terms and conditions set forth in the Uniform Offering
Circular (31 CFR Part 356) for the sale and issue by the
Treasury to the public of marketable Treasury bills, notes,
and bonds.
Details about the new security are glven in the
attached offering highlights.
000
Attachment
RR-1049
Far press releases, speeches, public schedules and official biographies, call our 24-hour fax line at (202) 622-2040
HIGHLIGHTS OF TREASURY OFFERING
OF 36-DAY CASH MANAGEMENT BILL
May 1, 1996
. $13,000 million
Offering Amount .
Description of Offering:
Term and type of security
CUSIP number
Auction date
Issue date
Maturity date
Original issue date
Currently outstanding
Minimum bid amount
Multiples .
Minimum to hold amount
Multiples to hold
Submission of Bids:
Noncompetitive bids
Competitive bids
36-day Cash Management Bill
912794 Z4 9
May 9, 1996
May 15, 1996
June 20, 1996
December 21, 1995
$27,607 million
$10,000
$1,000
$10,000
$1,000
Accepted in full up to $1,000,000 at
the average discount rate of accepted
competitive bids
(1) Must be expressed as a discount rate
with two decimals, e.g., 7.10%.
(2) Net long position for each bidder must
be reported when the sum of the total
bid amount, at all discount rates, and
the net long position is $2 billion or
greater.
(3) Net long position must be determined
as of one half-hour prior to the
closing time for receipt of competitive tenders.
Maximum Recognized Bid
at a Single Yield
35% of public offering
Maximum Award .
35~
Receipt of Tenders:
Noncompetitive tenders
of public offering
Prior to 12:00 noon Eastern Daylight
Saving time on auction day
Competitive tenders .
Prior to 1:00 p.m. Eastern Daylight
Saving time on auction day
Payment Terms .
Full payment with tender or by charge
to a funds account at a Federal
Reserve Bank on issue date
REPORT TO THE SECRETARY OF THE TREASURY
FROM THE
TREASURY BORROWING ADVISORY COMMITTEE
OF THE
PUBLIC SECURITIES ASSOCIA nON
May 1,1996
Dear Mr. Secretary:
Since the Committee's last meeting on January 31, 1996, economic growth has revived
following a sluggish period marked by inventory adjustments, weather-related disruptions, and a partial
Federal government shutdown. Stronger-than-expected growth in nonfarm payrolls and consumer
spending has fueled the increased pace of business activity. Inflationary pressures have generally
remained dormant, but significant increases have recently occurred in prices of grains and energyrelated products due to lean inventories and increased world-wide demand.
Early in the year, interest rate levels anticipated a sluggish economy, restrained price pressures
and agreement on a compromise 7-year budget-balancing plan. In tum, these events were expected to
lead to further easings by the Federal Reserve. Subsequently, the economy's revival, the collapse of
budget talks, and increased commodity inflation have led to significantly changed expectations.
Forward eurodollar rates have risen by over 100 basis points, and intermediate and long-term Treasury
yields have risen by 75-100 basis points since January. Market participants now seem to perceive the
risks of unacceptably sluggish or rapid economic growth as evenly balanced. However, in light of full
employment conditions and stepped-up hiring, fears of eventual modest upward pressure on wages
appear to have increased.
Against this background, the Committee was charged with offering advice on the profile of
Treasury marketable financing for the period through the July-September quarter. In framing its
recommendations, the Committee took into consideration the Treasury's decision to increase the
frequency of offerings of 10-year notes and 30-year bonds. Specifically, the Treasury has indicated its
plans to introduce two new 10-year note offerings - in mid-July and mid-October - thus raising to
six the number of such offerings per year; and to introduce one new 30-year bond offering - in midNovember - thus raising to three the number of such offerings per year. The Committee further
understands that the Treasury plans to reduce the size of each such offering somewhat from current
levels, such that overall issuance in these maturity sectors in future years does not change significantly
from levels that otherwise would have occurred.
Within this context, to refund the $35.0 billion of privately-held notes maturing on May 15,
1996 and to raise $14.0 billion of cash, the Committee unanimously recommends that the Treasury
auction $49.0 billion of the following securities:
•
•
•
$19.0 billion 3-year notes due May 15, 1999~
$14.0 billion 10-year notes due May 15,2006;
$16.0 billion cash management bills due June 20, 1996.
The Committee believes that $14.0 billion is the appropriate issue size for the 10-year note in
the current mid-q~arter refunding. This amount is consistent with market expectations and should not
be affected by the mcreased frequency of 10-year offerings scheduled to begin in July.
With the aim of achieving a cash balance of $3 5 billion on June 30, the Committee unanimously
recommends that for the remainder of the quarter, the Treasury meet its borrowing requirement in the
following manner:
•
One 5-year note totaling $12.5 billion, to raise $3.3 billion of new cash;
•
One 2-year note totaling $18.75 billion, to raise $0.6 billion of new cash;
•
Two I-year bills totaling $19.25 billion each, to raise $0.6 billion of new cash;
•
Weekly issuance of 3- and 6-month bills through the remainder of the quarter, to raise
$9.5 billion of new cash;
•
The issuance of intra-quarter cash management bills to cover the low cash point in
June; and
•
The paydown on June 20 of $16.0 billion of cash management bills issued m
conjunction with the May refunding.
Including the $14.0 billion raised in the mid-quarter refunding as well as anticipated foreign
add-ons of$3.0 billion, the proposed financing schedule will raise a total of$15.0 billion. This amount,
after subtracting the net paydown of $35.0 billion to date in the quarter, will accomplish the total net
paydown of $20.0 billion.
For the July-September quarter, the Treasury estimates a net borrowing requirement in the
range of $55-60 billion with a cash balance of $40.0 billion at the end of September. To accomplish
the anticipated net borrowing requirement, the Committee took into consideration the planned
increased but irregular cycle of IO-year note and 30-year bond offerings. The Committee reviewed the
question of desired minimum issue sizes; that is, sizes which would facilitate liquid secondary markets
and limit the risks of occasional acute and protracted shortages. For the 10-year notes, the Committee
believes that the two sets of issues to be offered one month apart -- that is, the July-August and
2
October-November offerings -- could be set initially at a minimum size of $1 0 billio~ reflecting the
increased potential for more frequent re-openings. For the other two annual issues-- that is, the
February and May offerings -- the Committee believes that it would be preferable to target an initial
minimum size of $12 billion. For each of the planned three annual offerings of 30-year bonds, the
Committee believes that initial minimum sizes should not be smaller than $10 billion.
Overall, this initial annual pattern of 10- and 30-year securities would increase only modestly
the amount of issuance relative to that which would occur in future years with normal increases in
coupon issue sizes. In the Committee's view, this would represent a reasonable initial balance between
planned levels of issuance and considerations of market liquidity. Also, while the planned variations in
the sizes of the lO-year note offerings could introduce some additional market uncertainty, that risk
would be limited by transparency around the Treasury's announcement of its plans and intentions in
introducing the new issue cycle. Longer term, the Committee remains supportive of the goal of more
frequent and regular issuance of longer-term debt to temper somewhat the pace of the decline in the
average length of the debt and the proportion maturing within two years.
The Committee supports the timing of the two additional 10-year note offerings -- that is, July
15 and October 15. Initially, these new issues can refund maturing 7-year notes. Also, the Treasury's
borrowing need is typically larger in the July-December period. In additio~ this financing pattern will
modestly divert a portion of coupon payments away from the large mid-quarterly coupon payment
dates.
In a similar vein, an additional bond offering on November 15 is well placed to meet Treasury
cash needs. There is also a market related benefit of regularly increasing the strippable product with
May 15 and November 15 maturities.
In light of the planned issuance of a new 10-year note in July, and the expected reduced size of
the 10- and 30-year offerings in the August refunding, the Committee considered the question of the
need for continual modest increases in size of other coupon offerings. By an 11-4 vote, the Committee
preferred no further increases in the July-September quarter in the I-year bills as well as 2-, 3- and 5year note sizes. The majority felt that, given the additional financing in the 10-year sector during the
quarter as well as continued reductions in the federal budget deficit, the Treasury could pause for a
short time before resuming the gradual size increases in regular cycle offerings. The specific
recommended profile of Treasury offerings for the July-September is set forth in the enclosed schedule.
The minority preferred continued incremental increases in issue amounts. This group felt that
further increases would still be needed to offset in an orderly fashion the impact of the maturing 5-year
note cycle. In this regard, they note that the more frequent but reduced size offerings in the long end
will raise less net cash in the July-September quarter than the amount which would be raised by normal
modest increases in regular cycle offerings.
In response to a request for its views, the Committee considered the significant variation of the
sizes of weekly bills and the heavy reliance on cash manag~ent bills in.r~e.nt months. The Tr~ry
followed this course largely to manage cash and debt dunng the debt limit unpasse. The Commtttee
3
did not perceive any significant market impact as a result of this financing behavior. As the issue sizes
varied, there were occasional small yield differences between the affected Treasury bills. But overall,
the market adapted well to the uncertainty and unpredictability of Treasury bill financing during this
period. Market participants recognized the constraints imposed on the Treasury as a result of the debt
limit considerations and, as such, believed that the related uncertain financing behavior was temporary.
The Conunittee continues to believe that consistent and predictable financing operations are
most effective in reducing the Treasury's cost of borrowing. Accordingly, in the Committee's
judgment, weekly bill offering sizes should remain relatively stable and cash management bills should be
relied upon to more efficiently meet temporary or seasonal cash needs.
Respectfully submitted
Richard M. Kelly
Chairman
4
Estimated Treasury Marketable Borrowing
(billions of doUars)
July - September 1996
Amount
Maturing
Amount
Offered
$355.7
367.7
12.0
18.4
18.5
19.3
19.25
19.25
19.25
0.S5
0.75
-0.05
411.9
425.5
13.5
IS.1
9.4
18.75
12.5
Foreign
Add-ons
TreasuI)' bills *
Regular weekly bills
Cash
Raised
52-week bills
July 25
August 22
September 19
Total bills
Treasury coupons
June 2-year
June 5-year
~uly
7-year
7.7
July IO-year
July 2-year
July 5-year
18.2
9.6
Aug.3-year
Aug. 10-year
Aug. 30-year
Refunding subtotal
Redemption of 8% 8/15/01
1.0
0.5
17.6
1.65
3.6
-7.7
10.0
0.2
10.2
18.75
12.5
1.0
0.5
1.55
3.4
19.0
10.0
10.0
0.8
0.2
39.0
--
~
1.0
0.7
22.4
-0.7
Aug.2-year
Aug.5-year
18.5
9.3
18.75
12.5
1.0
0.5
1.25
3.7
Sept. 2-year
Sept. 5-year
18.4
9.7
IS.75
12.5
1.0
1.35
~
---.l.l
Total coupons
137.2
174.0
7.2
44.0
Total borrowing
549.1
599.5
7.2
57.5
*Assumes that intra-quarter cash management bills will be needed to cover cash low points during the quarter.
MINUTES OF THE MEETING OF THE
TREASURY BORROWING ADVISORY COMMITTEE
OF THE PUBLIC SECURITIES ASSOCIATION
April 30 and Kay 1, 1996
April 30
The Committee convened at 11:35 a.m. at the Treasury
for the portion of the meeting that was open to the
publ1c. All members were present, except Mr. Kessenich, Mr.
Lodge, and Mr. Rosenberg. The Federal Register announcement of
the meeting and a list of Committee members are attached.
Depa~tment
Ass~stant Secretary f~r Financial Markets Bradbury welcomed
the Comm1ttee and the publlC to the meeting. Assistant Secretary
for Economic Policy Gotbaum summarized the current state of the
U.S. economy. Paul Malvey, Senior Economist, Office of Market
Finance, discussed charts, which had been released to the public
on April 29, updating Treasury borrowing estimates and providing
statistical information on recent Treasury borrowing and market
interest rates.
The public meeting ended at 12:15 p.m.
May refunding
The Committee reconvened in closed session at the Madison
Hotel at 2:30 p.m. The members were present who had attended the
public briefing. Assistant Secretary Bradbury gave the Committee
its Charge, which is also attached.
The Committee began by considering the attached proforma
financing plan for the April-June quarter that had been prepared
in advance by one of the members, using the market borrowing
estimates that were released by the Treasury on April 29. The
committee voted unanimously to recommend that the Treasury issue
$19.0 billion of 3-year notes, $14.0 billion of 10-year notes,
and $16.0 billion of cash management bills maturing June 20 in
the May refunding. The committee also foresees that the Treasury
will need to issue more short-term cash management bills for the
period from early June until after the June 15 tax payment date.
Frequency of new 10- and 30-year security auctions
The discussion of the overall Treasury financing plan for
the July-September quarter was deferred until after the committee
discussed the question in the Charge pertaining to increasing the
frequency of new issues of lo-year note~ and 30-year bonds. The
Committee discussed concerns that the Slzes of each tranche of
10-year notes and 30-year bonds would be relatively small, if the
Treasury does not increase its annual issuance in those
maturities.
2
The committee unanimously agreed to recommend that the
Treasury auction a minimum of $10 billion of 30-year bonds in
each of the February, August, and November midquarter refundings,
and auction a minimum of $10 billion of 10-year notes in July,
August, octobe:, and November and that the Treasury auctions of
lO-year notes 1n February and May be $12 billion each. This
schedule is designed to provide a greater amount of, and thus
promote market liquidity in, each 10-year note auctioned in the
first half of the calendar year. This combination of changes
would not significantly increase Treasury borrowing in longer
maturities compared with what it otherwise would have been.
July-September borrowing plan
The Committee discussed an overall approach to funding for
the July-September quarter, displayed in the attached draft
proforma. The Committee voted by 11 to 4 to recommend that the
Treasury not increase the sizes of new issues of 2-, 3-, and 5year notes materially over the near term and rely more heavily on
bill financing in order to balance any increase in longer term
issuance.
Volatility of bill issuance
The Committee overall view was that the market had reacted
in a benign manner to variations in bill financing that were
necessitated by the debt limit impasse, which extended from the
fall 1995 through March 1996. The Committee consensus was that
the Treasury had done what it needed to do in the debt limit
situation, but, for cash management in more normal times, the
Treasury should maintain relatively stable regular weekly bill
auction sizes.
The meeting adjourned at 4:10 p.m.
3
May 1
The Committee reconvened at 8:30 a.m. at the Treasury in
closed session. All members were present, except Mr. Kessenich,
Mr. Lodge, Mr. Rosenberg, and Mr. Stark.
The Chairman
presented the Committee report (copy attached) to Under Secretary
for pomestic Finance John D. Hawke and Assistant Secretary
Bradbury.
In response to questions, the committee expanded on the
discussion in the Committee report regarding the sizes of the 10year notes and the 30-year bonds, which the Treasury has decided
to offer more frequently.
The meeting adjourned at 8:50 a.m.
_~~ ~l-y-
~ 11 K. Ouseley, Direct~
/~ffice
of Market Finance
Domestic Finance
May 1, 1996
Attachments
certified by:
Richard Kelly, Ch irman
Treasury Borrowi g Advisory Committee
of the Public securities Association
May 1, 1996
14850
Federal Register I Vol. 61. No. 65 I Wednesday. April 3. 1996 / Notices
1996. We are therefore discontinuing
the proceedings heretofore instituted in
Ex Parte No. 388 (Sub-Nos. 1. 2. 3. 5. 9.
10.11.13.14.15.16.18.22.23.24.26.
27.29,33.35, and 36) (the certification
sub-dockets for Alabama. Arkansas.
Colorado, Georgia. Iowa. Kansas.
Kentucky. Maryland. Michigan.
Minnesota, Mississippi. Montana. New
Mexico. New York. North Dakota.
Oklahoma. Oregon, South Carolina,
Virginia. West Virginia. and Wisconsin.
respectively).
A copy of this notice will be served
on the Governor of each State. the
Public Service Commission (or other
appropriate regulatory agency) in each
State. and all other parties of record in
Ex Parte No. 388. Ex Parte No. 388 A.
and Ex Parte No. 388 (Sub-Nos. 1
through 37).
This action (we are simply stating ~e
effect that IcerA had on the preexisting
certification regime) will not
significantly affect either the quality of
the human environment or energy
conservation.
Decided: March 21. 1996.
By the Board. Chainnan Morgan. Vice
Chairman Simmons and Commissioner
Owen.
VerDon A. Williama,
Secretary.
[FR Doc. 96-0012 Filed 4-2-96; 8:45 amJ
B1WNG~4I'~
Surface Transportation Board 1
[STB Docket No. AB-47X)
J.P. Ralllne., T/A Southern Railroad
Company 01 New JerseyAbandonment Exemption; In Unwood,
Atlantic County, NJ
J.P. Rail Inc .. T/A Southern RailrcY J
Company of New Jersey (SRNJ) fil,. J. a
notice of exemption under 49 cr .. part
1152 Subpart F; Exempt Abanr .mmentl
to abandon a 3.38 mile line (" tts rail
line known as the Linwooc' .ndustrial
Track. from that point 00 .Jl8 line in
Pleasantville. in the vic·..tity ofDecatul
Avenue (approximatt>' J milepost 0.31+)
to the end of the lin' m the vicinity of
Wilson Avenue ar .i Poplar Avenue
(approximately' ,tiepost 3.69+) in
Linwood. Atia .tic County. Nf,2
I The ICC T .minalion Act ar 1995. Pub. L. No.
104-38. 109 ,tal. 803 (Ihe Act). which was enacted
on Decem~ "r 29. 1995. and look effect on January
1.1996 . .JOlished Ihe Interstate Commen:e
Co1M' .4ioo [lCC) and traNrerTlld certain NOctiOD.l
to thl.. .:iurfaca Transportation Board (Board). Tble
notice relat .. to runctiol1S that 4telubject to Boud
juriJdictlon pursuant to 49 U.S.c. 10903.
I The verified notice of examptloa was flIed 00
March 5. 1996. Board staff conticted SRNJ and
requested clarification of ill verified notlca. SRNJ
SRNJ has certified that: (1) No local
traffic has moved over the line for at
least 2 years; (2) there is no overhead
traffic on the line; (3) no formal
complaint filed by a user of rail service
on the line (or by a state or local
government entity acting on behalf of
such user) regarding cessation of service
over the li~e either is pending with the
Board or With any U.S. District Court or
has been decided in favor of
complainant within the 2-year period;
and (4) the requirements at 49 CFR
1105.7 (environmental reports). 49 CFR
1105.8 (historic reports), 49 CFR
1105.11 (transmittal letter). 49 CFR
1105.12 (newspaper publication). and
49 CFR 1152.50(dj(1) (notice to
governmental agencies) have been met.
As a condition to use of this
exemption. any employee adversely
affected by the abandonment shall br
protected under Oregon Short Lint' .l.
Co.-Abandonment-Goshen. 3f , I.C.C.
91 (1979). To address whether' ..tis
condition adequately protectf dffected
employees. a petition for pI> dal
revocation under 49 U.S.r 10502(d)
must be filed.
Provided no fonna' 4xpression of
intent to file an offf' . of financial .
assistance (OF A) , .8.1 been received: this
exemption will .A effective on May 3,
1996. unless r .dyed pending
reconsiderl" .on. Petitions to stay that do
not invoh' ~ environmental issues.)
formal f' .pressions of intent to file an
OFA , ..ider 49 CFR 1152.27(c)(2).4 and
traH .Jsa/rail banking requests under 49
CY.( 1152.29' must be filed by April 15,
, <196. Petitions to reopen or requests for
pubUc use conditions under 49 CFR
1152.28 must be filed by Aprl123. 1996.
with: Office of the Secretary. Case
ConuolB~.SurmceT~portation
Inppl.mented tbe record by Iatt.- flied Mucb 14.
1998. a.c.u. the notJce mUll be Wed with Uw
Boud at I8Mt 50 dlye
the abandonment II
10 be CODIUllllDAted. CDIIIUDIIIIIlloa may DOt occur
before M.y 3. 1991. s.. 48 CFR 1 151.SO(d)(2). SRNJ
h.u ~ that Uw IXImIct COnlUlJllDAtioo date
of tbe abandonment will be ~ 3. 1998. At DOted
subMqueady In tht, DOtia. tbe cumption will be
effacti" on Uwt dat..
JTbe Baud will FUll llUiy lie informed
dect,lon on lllvironmentallaaual (wb" raiaed
by a pert)' Ott by \.be Board'1 Sectloo of
Environmental An.e1ysia in III Independent
Investipdon) caDDOl be mede belore the
exemptioo', .ffectift date. s.. s-rnptloll of 0uIof-S«ri:e Bail Un_ 51.C.C.ld 311 (1989). Any
requeat for a lUiy ahould be flied .. lOOn .. poaibl.
10 tbat the Baud may take appropriate action belon
the uempdoD" e!f.:ti" date.
os.. Exempt. of Rail Aband~ of
Finan. 1\.IUt.• 4 lC.C.:zd 164 (1987).
, The Board will accept lat.rued trail u.
reqUNIi so 10", as tbe u.ndolllMDt baa not been
COlllummated end the abandoniDs I"IUro.d Ie
willlna to oegocl.t. an . . - - - -
bam
Board. 1201 Constitution Avenue .W.
Washington. DC 20423.
A copy of any petition filed ith the
Board should be sent to app' _ nt's .
representative: John K. Firjla oVatson.
Stevens. Fiorilla &: Rutte 390 large
Street. P.O. Box 1185. ~ w Bn. swick.
NJ 08903.
If the verified not' .8 contain false or
misleading infol'TT .ion. the ex nption
is void ab initio
SRNJ has fi)· • an environ mE tal
report whid' Addresses the
abandonm' .lts effects. if any. a the
environrr )nt and historic resOl ces. The
Sectior .)f Environmental Anal sis
(SEJ}' .viII issue an environme .al
asS' .>Sment (EA) by AprilS. 19 5.
Ir .erested persons may obtain copy of
..ae EA by writing to SEA (Rool 3219.
Surface Transportation Board.
Washington. DC 20423) or by c lling
Elaine Kaiser. Chief of SEA, at W2)
927~248. Comments on envirl Ilmental
and historic preservation matte s must
be filed within 15 days after th EA
becomes available to the pub Ii
Environmental. historic pres rvation.
public use. or trail use/rail baIl ing
conditions will be imposed. w ere
appropriate. in a subsequent d oslon.
Decided: March 26. 1996.
By the Board. David M. Konschl k.
Director. Office of Proceedings.
V _ A. Williama.
Secmary.
(FR Doc. 96-3013 Filed 4-2-96; 8: 5 amI
8II.IJNQ
co. 411......
DEPARTMENT OF THE TREASURY
Departmental Offtces, Debt
Management Advisory Committee;
MeetIng
Notice is bereby given, pursuant to 5
U.S.c. App. 10(a)(2). that a meeting will
be held at the U.S. Treasury
Department. 15th and Pennsylvania
Avenue, NW .• Washington. DC. on April
30 and May 1. 1996. of the following
debt management advisory committee:
Public SeoJritiea AAociation
Treuury Borrowing Adviaory Committee
The agenda for the meeting provides
for a technical background briefing by
Treasury staff on April 30. followed by
a charge by the Secretary of the Treasury
or his designate that the committee
discuss particular issues. and a working
session. On May 1. the committee will
present a written report of its
recommendations.
The background briefing by Treasury
staff will be held at 11:30 a.m. Eastern
time on April 30 and will be open to the.
pubUc. The remaining sessions on April
Federal Register / Vol. 61, No. 65 / Wednesday ..-\prl·! .,
3 l,.,ngc'
'J .
OJ ! i o/:rl'lS
30 and the committee's reporting
session on May 1 will he closed to thp
publIc. pursuant to 5 U.S:c. ;\tlp· lO(d).
This notice shall constitute my
detennination. pursuant to the authority
placed in heads of departments by 5
U.s.c. App. Wid) and vested in me by
Treasury Department Order No. 101-05,
that the closed portions of the meeting
are concerned with information that is
exempt from disclosure under 5 US.c.
55Zb(c)(9)(A). The public interest
requires that such meetings be closed to
the public because the Treasury
Department requires frank and full
advice from representatives of the
financial community prior to making its
final decision on major financing
operations. Historically. this advice has
been offered by debt management
advisory committees established by the
several major segments of the financial
community. When so utilized. such a
committee is recognized to be an
advisory committee under 5 U.S.c. App.
3.
Although the Treasury's final
announcement of financing plans may
not reflect the recommendations
provided in reports of the advisory
committee, premature disclosure of the
committee's deliberations and reports
would be likely to lead to significant
financial speculation in the securities
market. Thus. these meetings fall within
the exemption covered by 5 u.s.e.
552b(c)(9)(A).
The Office of the Assistant Secretary
for Financial Markets is responsible for
maintaining records of debt
management adviSOry committee
meetings and for providing annual
reports setting forth a summary of
committee activities and such Dther
matters as may be informative to the
public consistent with the policy of 5
U.s.c. 552b.
Dated: March 27. 1996.
Darcy Bradbury.
. \'.>',stant Secretary. Financial Markets.
II:H Doc. Y6-8088 Fi led 4-2-96; 8:45 ami
BILLING CODE 48tO-2S-M
Office of the Comptroller ot 1M
Currency
[Docket No. 96-07]
Covered Executive Branch Offlclals at
the Office of the Comptroller of the
Currency Under the Lobbying
Disclosure Act of 1995
AGENCY: Office of the Comptroller of the
Currency. Treasury.
ACTION: Notice.
SUMMARY: The Office of the Comptroller
of the Currency is publishing a list of
th~ current "Covered executive branch
\cia!s" ~t theagencv for purposes of
the \obbymg DlSclosu re .\cl of 199~
(the \ct) and the name of an office at
the al 'Dcy that will identifv "covered
execUl 'Ie branch officials" for purposes
of the r. .t.
EFFECTlV, DATE: January 1. 1996.
0\
FOR FURTh 'R INFORMATION CONTACT:
Barrett Ala meyer. Senior Counsel.
Administrat. 'e and Internal Law
Division. 202. 874-4460; Heidi Thomas,
Legislative Co '15el. or Nancy
MichaJeski. As~ 'itant Director.
Legislative and I 'gulatory Activities
Division. 202-87· ·5090. Office of the
Comptroller of the -:urrency. 250 E
Street SW .. Washin t 'on. DC 20219.'
Covered Executive B~ \Dch Officials at
theOCC
The Act (Pub. L. 104- 5. 109 Stat.
691), codified at 2 U.s.c. '601 et seq ..
repeals the Federal Regult ion of
Lobbying Act. 2 U.S.c. 261 ,t seq.. and
puts into place new Federal
requirements for the disclosu ,and
registration of individuals wh l make
lDbbying contacts with covered -:'ederaJ
legislative and executive branch
officials. The Act generally becan.
effective on January 1. 1996.
To assist individuals in compJyin
with the requirements of the Act. th~
ace is publishing the names of the
officials at the oce who currently are
"covered executive branch officials."
The Act defines a "covered executiw
branch official." among other things. to
include any officer or employee serving
in a position in Levels I through V of the
Executive Schedule, or any officer and
employee serving in a position of a
confidential. policy-determining,
policy-making, or policy-advocating
character described in section 5 U.S.C.
7511(b)(2).1
The ace has detennined that the
following individuals are currently
covered by the Act and bave been
covered since the date of enactment
because they serve in positions in the
Executive Service or in Schedule C
positions:
• Eugene A. Ludwig, Comptroller
• Mark P. Jacobsen. Senior Advisor to
the Comptroller
I Recent guidaJlCll iuued by tb. Clerk of the
House of Rspresentativea and 'he Secretary of the
Senate states t~t the Offie. of Penonnel
Management (OPM) baa indiuted thlt all Schedule
C employ_ are within S U.S.c. 7S1l(bl(2) and.
there{ore, covered by the Act. The recent guidance
also indicates tlat OPM may find that additional
positions are covered by S U.S.c. 751 !(bl(l"
However. this infonNtion i. proYlded only at
guidance and it i. nollegally binding. Tbe guidane.
states that the Act doea not provide the Clerk or the
Secretary with authorIty to i.uue subiUnliYe
reguiatiora or definiliw inllTpretltiona of the law.
14B51
• Konrad S. All. Senior Deputy
Comptroller
• Oouglus E. HlIrr1" SI:1Ulor Deputy
Comptroller
The Act reqUires each "covered
executive branch official" or. in the
alternative. the official's employing
office. to identifv ·.vhether the official is
covered by the ..,. upon the r~quest of
a person making d lobbying contact. To
obtain updated infQrmation from the
OCC about whether an OCC employee is
a "covered executive branch official."
an individual may contact the following
acc office: Office of Communications.
Office of the Comptroller of the
Currency, 250 ESt.. SW .. Washington.
D.C. 20219. (202) 874-4700. Attention:
Frank Vance. Disclosure Officer. [n
addition. as necessary. the
may
publish a revised list of acc "covered
executi ve branch officials."
Dated: Man;h 27.1996.
oec
Eupne A. LudwiS.
Comptroller of the Currency.
IFR Doc. 9&-8131 Filed 4-2-96: 8:45 ami
8ILUNG CODe
.1~
CUstoms Service
Application for RecordatJon of Trade
Name: "OMllndustries, Inc."
ACTION: Notice of Application for
Recordation of Trade Name.
SUMMARY: Application has been filed
lUrsuant to section 133.12. Customs
I. 19u1ations (19 CFR 133.121. for the
~ 'ordation under section 42 of the Act
of, Ily 5.1946. as amended (15 U.S.c.
112, I. of the trade name "OMI
INDL 1)TRIES. INC. ... used by OMI
Indus\ las. Inc., a corporation organized
under l 'e laws of the State of Ohio.
located, ' 310 Outerbelt Street.
Columbu Ohio 43213.
The app lcation states that the trade
name is Ust \ in connection with
aluminum III 1 steel die cast products.
The merchant ;se is manufacturOO in
Russia.
Before final a,ion is taken on the
application. coo!', ieration will be g.iven
to any relevant da " views. or
arguments submittl ~ in writing by any
person in oppositiOl. \0 the recordation
Df this trade name. N\ 'ice of the action
taken on the applicatit , for recordation
of this trade name will , ~ published in
the Federal Register.
DATES: Comments must be ':eCei ved on
or before June 3. 1996.
ADDRESSES: Written cornmen 'i should
be addressed to U.S. Customs 'ervice.
Attention: Intellectual Propert}'\ '{jghts
Branch. 1301 Constitution Avert e.
Treasury Borrowing Advisory Committee
of the
Public Securities Association
Chainnan
Richard Kelly
Chairman of the Board
Aubrey G. Lanston & Co., Inc.
One Chase Manhattan Plaza, 53rd Fl.
New York, NY 10005
Vice Chainnan
Stephen Thieke
Chairman, Market Risk Committee
IP Morgan & Company, Inc.
60 Wall Street, 20th Floor
New York, NY 10260
Daniel S. Ahearn
President
Capital Markets Strategies Co.
50 Congress Street, Ste. 816
Boston, MA 02109
Stephen C. Francis
Managing Director
Fischer, Francis, Trees & Watts, Inc.
200 Park A venue, 46th Fl.
New York, NY 10166
James R. Capra
President
Capra Asset Management, Inc.
555 Theodore Fremd Avenue Ste C-204
Rye, NY 10580
Barbara Kenworthy
Managing Director
of Mutual Funds - Taxable
Prudential Insurance
McCarter Highway
2 Gateway Center, 7th Floor
Newark, NJ 07102-5029
Kenneth M. DeRegt
Managing Director
Morgan Stanley & Co., Incorporated
1585 Broadway
New York, NY 10036
Mark F. Kessenich, Jr.
Managing Director
Eastbridge Capital, Inc.
308 Royal Poinciana Plaza
Palm Beach, FL 33480
2
Richard D. Lodge
President
Bane One Funds Management Company
100 East Broad Street, 17 Fl.
Columbus, OH 43271-0133
William H. Pike
Managing Director
Chemical Bank
270 Park Avenue
New York, NY 10017
Wayne D. Lyski*
Chairman & Chief Investment Officer
Alliance Fixed Income Investors
Alliance Capital
Management Corporation
1345 Avenue of the Americas
New York, NY 10105
Richard B. Roberts
Executive Vice President
Wachovia Bank & Trust Co., NA
P.O. Box 3099
Winston-Salem, NC 27150
Robert D. McKnew
Executive Vice President
Bank of America
555 California Street, 10th Fl.
San Francisco, CA 94104
Joseph Rosenberg
President
Lawton General Corporation
667 Madison Avenue
New York, NY 10021-8087
Michael P. Mortara*
Partner
Co-head Fixed Income Division
Goldman-Sachs
85 Broad Street, 26th Floor
New York, NY 10004
Morgan B. Stark
Principal
Ramius Capital Group
40 West 57th Street, 15th Floor
New York, NY 10019
Daniel T. Napoli
Senior Vice President
Merrill Lynch & Company
250 Vesey Street, North Tower
World Financial etr, 8th FI.
New York, NY 10281
Craig M. Wardlaw
Executive Vice President
Nations Bank Corporation
Nations Bank Corporate Center
Mail Code NCr 007-0606
Charlotte, NC 28255-0001
*New member
April 30, 1996
COMMITTEE CHARGE
The Treasury would like the Committee's specific advice on the
following:
Treasury financing
the composition of a financing to refund $35.0 billion of
privately held notes maturing on May 15 and to raise $12 to
$14 billion of cash in 3- and la-year notes and cash
management bills; and
the composition of Treasury marketable financing for the
remainder of the April-June quarter and the July-September
quarter.
Longer range borrowing
We are planning to announce increases in the frequency of
la-year notes to 6 times per year and 30-year bonds to 3 times
per year. Therefore, we also would like the Committee's views on
the following:
we plan to reduce the size of each auction somewhat from
current levels so that total annual issuance in future years
will not change significantly from the levels that otherwise
would have been necessary.
the 6 issues of la-year note issues each year would occur in
the regular midquarter refunding operations and on July 15
and October l5i
the 3 issues of 30-year bonds each year would occur in the
February 15, August 15, and November 15 midquarter refunding
operations; and
the July 15 and October 15 la-year notes would have July 15
and October 15 maturity dates, unless they were reopenings
of outstanding midquarter refunding securities, and they
would be strippable.
other topics
The Treasury varied the sizes of the weekly bills and relied
relatively heavily on cash management bills to manage cash and
debt during the debt limit impasse. Please discuss the market's
reaction to the volatility of weekly bill sizes and the more
frequent issuance of cash management bills.
We would welcome any comments that the committee might wish
to make on related matters.
Summary of April - June 1996
Estimated Net Marketable Borrowing
(billions of dollars)
Net new money raised in issues announced (as of "'/29/96.3:30 p.m.):
Regular Treasury bills (
52-week Treasur;. bills (
Cash management btlls
2-year notes (includes
5-year notes (includes
7-year notes redemption
$0.00 billion of foreign add-oos)
SOOO billion of foreign add-ons)
-5 9
2.8
-38.3
S3A7 billion of foreign add-ons)
$1.10 billion of foreign add-ons)
4.9
9 1
:.21
-35.1
Net new money yet to be raised
Regular Treasury hill'5 (
52-week Treasury hills (
Cash management bills (
2- & 5-year notes (
,"lid-quarter refunding (
50.00
SO.OO
50.00
52.75
52.35
billion offoreign
billion offoreign
billion offoreign
billion offoreign
billion offoreign
add-ons)
add-ons)
add-ons}
add-ons)
add-ons}
7.5
0.6
0.0
6.6
fU
15.5
Total net marketable borrowing in the quarter
-19.7
,Vote: Assumes an end-ofquarter cash balance of 53 j billion.
Summary of July - September 1996
Estimated Net Marketable Borrowing
(billions of dollars)
Net new money to be raised
Regular Treasury bills (
52-week Treasury bills (
Cash management bills (
2- & 5-year notes (
Mid-quarter refunding (
7-year notes redemption
SO.OO billion offoreign add-ons)
SO.OO billion offoreign add-ons)
SO.OO billion offoreign add-ons}
54.50 billion offoreign add-ons}
$0.25 billion offoreign add-ons}
Total net marketable borrowing in the quarter
Note: Assumes an end 0/ quarter cash balance of $40 billion.
14.9
3.1
0.0
21.3
28.9
-L1
60.5
Estimated Treasury :YIarketable Borrowing
(billions of dollars)
April - June 1996
T0tJI estimated marketable borrowing
-I q
T0tal nct marketable borrowing issued or announced through Apr!i
Total remaining net marketable borrOWing
(15h balance Jt end of quarter
. \mount
,\1arunng
Amount
Offered
~C)
1996
~
-:'5 I
15 5
~5
Foreign
.-\ dd-c,ns
Cash
Cumulative
raised
cash rJlsed
;- .i; 6-JTwnthJ~ilJs
r::r
;.:
26.9
273
25.6
')7 ")
24.6
_J._
26.9
27.1
fi9-}fay
30.9
27.0
16-.Hay
2J-Jfay
30-J/ay
06-Jull
/3-Jun
20-Jun
] "'-Jun
28.7
26.5
29.3
26.9
27.6
26.7
27.0
J7.0
29.0
52:~.. eJ!J;lulli
O-l-Apr
02-M3:3D-May
\7.6
180
18.6
l7-Jun
19.3
0.0
0.0
0.0
30.0
I)~- ,-\
I I-Apr
18-Apr
25-A;::>r
O:-\lay
JS-Jlay
03-Jun
lO-lull
lO-lun
20-Jun
20.7
')~
.,
00
00
00
00
00
03
-0 I
-~
9
-I -!
0.2
30.0
30.0
30.0
30.0
f). 0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
189
194
0.0
0.0
19.3
0.0
/9.3
0.0
30.0
14.0
20.1
0.0
0.0
0.0
00
00
00
00
0.0
0.0
-30.0
-4J.2
-20. I
0.0
0.0
50.0
25.0
25.0
0.0
0.0
0.0
0.0
25.0
25.0
-50.0
78
00
-78
2.5
1.7
24
OJ
4,4
26.0
Cash \1anp~ru~Llhlls
Sertlement
\1arurity
date
date
I) i-Apr
10-Apr
OJ-Apr
18-Apr
OJ-.-\pr
25-Apr
10-Apr
18-Apr
25-Apr
~
43.2
ll.l
-J.9
-1.7
1.0
2.5
f). I
3.1
2.4
3.3
U
1.5
O. 7
-0.1
17.6
8.0
0.0
18.J
120
.-\pnl 2-: ear
-\pnl 5-year
180
8.6
188
12.5
Hay 3-year
0.0
35.0
/9.0
1.6
20.6
14.5
f). Ii
-19.8
\fay JO-year
.Hay 30-year
3.4
30.0
l·tO
Il.l
C0upons
.-\pril ~-:ear
\1:!rch 2-: ear
\larch 5-year
I 8
0.7
1.6
-38.3
47
0.11
OLO
O~O
o.a
Total Refunding
35.0
33.5
2.4
0.8
Jfay 2-year
J/ay 5-year
18.1
1.8
1.0
2.3
9.2
18.8
11.5
4.3
JJ.6
Grand total
693.1
663.7
9.7
-19.7
-19.7
Estimated Treasury Marketable Borrowing
(billions of dollars)
July - September 1q96
Totai ~5tJmated marketable borrowIng
Total net marketable borrOWIng issued Or announced through :\prtl 2Q. I q%
Total remaining net marketable borro\\ 109
CJsh bJiance at cnd of quarter
·\mount
.-\mounr
Offered
\Lj[urJn~
.;. i
605
i) 0
605
·w
rnr~ign
Clsh
-\jd-ons
r:lISed
CJmuiJ[J\ c
(Jsh rJJsed
')·m0n.(fL~Jls
27, -;
27. -;
22.9
23,2
27.6
30,0
27,3
26.7
26.9
30.4
27.7
28,6
28,5
OJ-Jul
II-Jul
18-Jul
25-Jul
30.V
29J)
0.0
29.0
0.0
29.0
29.0
28.0
28.0
2X.O
28.0
28.0
28.0
28.0
28.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
-2.4
0.3
-0.6
-0.5
14.9
19.8
19.8
19.8
0.0
0.0
0.0
1.4
1.2
0.5
3.1
0.0
0.0
45.0
25.0
0.0
0.0
0.0
25.0
20.0
-45.0
0.0
7'-yeur
June 2-year
June 5-year
July 2-year
Jull j-year
7.7
/8.1
9.4
18.2
0.0
-7.7
1.2
3.4
9.6
0.0
18.8
12.5
19.3
/3.0
-lugUJt 3-year
~uguS[ IV-year
~ugUS[ 30-year
Refunding
0.0
IX.3
19.5
/5.0
o.a
/2.5
18.3
47.0
0.3
0.0
0,0
0.3
2-year
August 5-year
18.5
9.3
/9.3
13.0
/.0
0.3
4.0
September 2-year
September 5-year
18.4
9.7
/9.3
13.0
1.0
1.9
0.3
3.6
42.6
593.5
649.3
4.8
60.5
60.5
()J-~ug
08-.~ug
J5-~ug
22-Aug
29-Aug
05-Sep
!2-Sep
/9-Sep
26-Sep
0.0
],3
1.3
6.1
5,8
1.4
-2.0
O. 7
1.3
1.1
52· '.'.s..ek_bllli
18.4
25-Jui
22-Aug
19-5ep
18.5
/9.3
Ca.sh manags;rnenr billS
Settlement
~fatunry
date
dare
02-Aug
03-Sep
19-5ep
19-5ep
19-5ep
20.0
0.0
CQ].)RQD.S
Ju~r
·jugtlS[
Grund tOlal
0.5
0.3
1.0
0.3
2.0
3.7
19.8
-3.3
12.5
28.9
1.8
TREASURY FINANCING REQUIREMENTS
January - March 1996
$Bi.,------------.....::......-:.-=---=..:....::...._ _ _ _ _ _ _ _ _----,
Uses
$Bil.
Sources
200
200
150
. . Coupon Refunding
State and
Local
Savings
Bonds
8
%
•
•
100
100
Net Market ...
Borrowing .,..
. . Deficit
~i
150
Includes budget deficit, changes in accrued interest and checks
outstanding and minor miscellaneous debt transactions.
Department of the TreaSIJry
Office of Market Finance
Apn129. 1996-1
TREASURY FINANCING REQUIREMENTS
April - June 1996
$Bil.r--------------~----.--------------,$Bil.
Uses
157'/.
Sources
150
150
. . Coupon Refunding
50
Increase
in Cash
Net
Market
Paydown
•
Balance Y . - .
•
State and
Local
Savings
Bonds
2%
1 ';.
•
•
100
50
I
Y
Assumes a $35 billion cash balance June 30, 1996.
V Includes budget deficit, changes In accrued interest and checks
outstanding and minor miscellaneous debt transactions.
Department of the Treasury
Office of Manc.el Fnancs
April 29. 1996-2
TREASURY OPERATING CASH BALANCE
Semi- Monthly
$Bil.r----------------=-----------,-----
60
Total Operating
Balance
•
40
20
o~---------------------Federal Reserve Account
..
~
..
.
,
,
. ,
-20
I
'''
I'
-40
I
_60L--L-~L-~L-~--J--J-~-~-~--L--L--L-~-~--
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
1995
Apr
May
Jun
1996
YAssumes refunding of matunng issues.
Dopartment of tne Tmasuty
ApnI29.1W6-3
Office af Marital Finance
TREASURY NET MARKET BORROWING 11
$BiI.
$Bil.
Coupons
DOver 10 yrs.
100
84.6
80
D
5-10yrs.,Y'
[J
2· under 5 yrs
100
80
•
Bills
60
60
40
40
20
20
0
0
-20
-20
-40
II
III
1992
IV
11
y
Oepar'lment of the Treasury
Office 01 Malkel FI/l8nc&
II
III
1993
IV
II
III
IV
1994
II
III
1995
IV
I
1996
-40
Excludes Federal Reserve and Govemment Account Transactions.
7 year note discontinued after April 1993.
A.pnI29,1996-4
NET MARKET BORROWING
April- June 1996
(Billions of Dollars)
Total
-20.0
D one .1i
Bills
Regular weekly
52 week
Cash management
-35.0
-5.9
2.9
-38.3
Notes
2 year notes
5 year notes
7 year note
4.9
9.1
-7.8
To Be Done
15.0
JJ Issued or announced through April 26, 1995,
Department of Treasury
Office of Mar1tet Finance
Aprll 29, 1996-48
NET NEW CASH FROM NONCOMPETITIVE TENDERS IN
WEEKLY BILL AUCTIONS 11
$Mil..----------------------------Net New Cash (left scale)
200
6.0
Discount Rate (right scal,e)
o 26 week
••••••• 26 week
•
-
13 week
Discount Rate %
13week
5.5
100
5.0
-100
-200
-300
_400~~~LLLL~~~~~~~-ULU~LL~~~~~~~~~~~~~~
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Apr
P
1995
y Excludes noncompetitive tenders from foreign official accounts and the Federal Reserve account.
Departmenl of the Treasury
Office Of Market Finance
p Preliminary
April 29, 1996-5
NONCOMPETITIVE TENDERS IN TREASURY NOTES AND BONDS.!!
$Bil.
$Bi I.
3.5
c:J2 & 5 Year
f-
-
3.5
-
3.0
-
2.5
-
2.0
fill 3. 10 & 30 Year
3.0 I -
2.5 I -
.
2.0 I -
"
1.5
1.5
..
l-
:~
,
1.0
~
0.5
-
1.0
,!
0.5
.'
o
A M J
Y
J
A SON D J
F M A M J
1994
J
A SON D J
1995
F M Ap
o
1996
Excludes foreign add-ons from noncompetitive ~nders. From October 18, 1995 to April 1, 1996, foreign add-ons were prohibited
to avoid exceeding the debt limit, foreign rellovers were excluded from noncompetiti'J'e tenders.
p Preliminary
Treasury increased the maximum noncompetitive award to any noncompetitive bidder to $5 million effective November 5, 1991.
Effective February 11, 1992, a noncompetitive bidder may not hold a position in WI trading, lutures, or forward contracts,
nor submit both competitive and noncompetitive bids for its own account.
April 29, 19r}6-6
Department oflhe Treasury
Office 01 Market Rnance
NET STRIPS OUTSTANDING (1985-1996)*
$Bil...-------------------=-------------,
200
1985 1986
1987
1988
1989
1990
1991
End of Quarter
'Strips program began February 15, 1985.
Reconstitution began May 1, 1987.
Department of the Treasury
otfk:L of Mafo(el Finance
Apnt 29, 1996-6a
SECURITIES HELD IN STRIPS FORM 1994-1996
Privately Held
$B ·llr--------------.:...:...::::.:..::..:..::.~=-------------, $BiI.
80
Strippable
II
D
Stripped
As of April 30, 1994: $721.1 billion, $221.2 billion
-
As of April 30, 1995: $777.1 billion, $227.1 billion
80
As of April 19, 1996: $823.9 billion, $227.0 billion
60
60
40
40
20
20
o
Less than 5 years
5-10 years
10-15 years
15-20 years
20-25 years
25-30 years
o
Years Remaining to Maturity
Note: The STRIPS program was established in February 1985. The 11 5/8% note of November 15.
1994. issued on November 15. 1984. was the first STRIPS-eligible security to mature.
Ot-partment or the Treasury
Office ot Market Anance
April 29, 1996-7
SECURITIES HELD IN STRIPS FORM 1994-1996
Percent of Privately Held
%
~--------------------------------------------------------------------,%
II
60
D
II
As of April 30, 1994
60
As of April 30, 1995
As of April 19, 1996
40
40
20
20
o
Less than 5 years
5-10 years
10-15 years
15-20 years
20-25 years
25-30 years
o
Years Remaining to Maturity
Note: The STRIPS program was established in February 1985. The 11 5/8% note of November 15.
1994. issued on November 15. 1984. was the first STRIPS-eligibl" ~cCu,.ty to matul~.
OepartJ'Mnl of tho Tmuury
Office of Market Fin811ce
ApnI29,1996-13
TREASURY NET BORROWING FROM NONMARKETABLE ISSUES
$Bil.
8
$BiI.
7.8
8
6
6
4
4
2
2
0
0
-2
-2
-4
-4
-6
CD
Savings Bonds
-8
it~
State and Local Series
II
Foreign Series
-10
-12
-6
-8
-10
-8.9
-12
-14
II1992"'
'V
II
"1993"' 'V
III
IV
1994
II1995"'
'V
,
lie
-14
1996
e estimate
Oepanm.nl of the Tr_sury
Office of Mar1(et Finance
April 29, 1996-9
SALES OF UNITED STATES SAVINGS BONDS
1980 - 1996
$Bil.
6
5
~~
Ii
4
\ . Total Sales
@
.1
f
3
t
A
,f
!
1
j&
!
2
•
Payroll Sales
~r
o~~~~~~~~~~~~~~~~~~~~~~~
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991
Oepa.rtrnent or the ireasury
Offj"a
o~
:,larket Finance
End of Quarter
e estimate
Aprll29, ,QQ6-10
STATE & LOCAL GOVERNMENT SERIES
....
...
: ..
$Bil.r---------------------------:-------,$Bil.
:•..
• •••••••
••
10
.. ..
".
#.,
•. .•.:
•
.. ·
•
:••••
••
10
•
.1/.
5
5
o~~--~--~~--~~~~--~~--~--~~--~------------o
$BiI.
$Bil.
o~~--~------~~~--~~--------------------------~o
-5
-5
_10L-~--L-L-~---L--~~--L--J--L-~--~~~~--~~~~-10
II
III
1992
II
III
1993
IV
IV
III
1994
1\
IV
II
III
1995
I
1996
Note: SLGS sales were suspended from October 18, 1995 to March 29, 1996.
Department at the Treasury
ApriI2Q,lQQ6-11
OffiCe of Marlcot Fmance
STATE AND LOCAL MATURITIES 1996-1998
$Bil.,....--------------------------------,$Bil.
7.3
2
o
Department of the Treasury
Office of Market Finance
II
III
1996
IV
II
III
1997
IV
II
III
1998
IV
April 29. '99&-12
QUARTERLY CHANGES IN FOREIGN AND INTERNATIONAL
HOLDINGS OF PUBLIC DEBTSECURITIES
$ B i l . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - . $BiI.
70
Nonmarketable
n
u
70
60
Marketable
Net Auction Awards to Foreign 1.I
o
60
50
•
50
Other Transactions
40
40
31.6
30
30
20
20
10
10
0
o
-10
-10
_20L------------L----------~------------~--~~~~~~
II
III
IV
II
1992
III
IV
1993
II
III
III
II
IV
IV
-20
1996
1995
1994
IV
21 Auction awards to foreign official purchasers netted agamst holdings of maturing securities.
V
Data through February 29, 1996.
Department of 1he Treasury
April 29, 1996-13
Ofbce of Marllet Finance
FOREIGN HOLDINGS AS A PERCENT OF TOTAL
PRIVATELY HELD PUBLIC DEBT
Percent
Percent
26
26
24
24
22
22
20
20
18
18
16
16
14
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
Quarterly
Depal'lment of tNt Trea.sury
Office of Market Finance
Apnl29,1996-14
MAJOR FOREIGN HOLDERS OF TREASURY SECURITIES
December 31. 1994
II
Country
Japan
United Kingdom
I
.1 As a "loot
$ Billions I Total
I
Foreign
December 31. 1995
iASa"loOf
Total
February 29, 1996
:
I As a "10 of
Ii$ Billions. Total
[ASa"loOf iAS a "10 of
$ Billions I Tolal
Total
Foreign
Private
i
i
Private
i
I $242.5
Foreign
lAs a "10 of
I Private
Total
$175.7
25.5"10
5.5%
$219.9
25.5"10
6.7%
26.4%
7.2%
91.0
13.2%
2.9%
123.6
14.3%
3.8%
127.5
13.9%
3.8%
1.7%
54.4
7.9%
1.7%
53.7
6.2%
1.6%
58.2
6.3%
Netherland Antilles
27.6
4.0%
0.9%
50.9
5.9%
1.5%
38.7
4.2%
1.2%
Switzerland
32.4
4.7%
1.0%
37.0
4.3%
1.1%
35.4
3.9%
1.1%
Singapore
21.9
3.2%
0.7%
29.7
3.4%
0.9%
39.3
4.3%
1.2%
Mainland China
20.5
3.0%
0.6%
34.9
4.0%
1.1%
22.9
2.5%
0.7%
Germany
28.0
3.2%
0.8%
28.1
3.1%
0.8%
25.1
2.9%
0.8%
29.0
3.2%
0.9%
OPEC
25.6
3.7%
0.8%
Canada
24.6
3.6%
Taiwan
25.8
3.7%
0.8%
0.8%
24.0
2.8%
0.7%
36.0
3.9%
1.1%
19.3
2.2%
0.6%
21.6
2.4%
0.6%
21.7
2.4%
0.6%
17.3
1.9%
0.5%
I
27.9
4.1%
0.9%
Hong Kong
I
13.8
2.0%
0.4%
18.8
2.2'/0
0.6%
Mexico
I
7.9
1.1%
0.2%
16.4
1.9%
0.5%
Belgium
I
13.1
1.9%
0.4%
12.7
1.5%
0.4%
12.8
1.4%
0.4%
9.7
1.4%
0.3%
9.2
1.1%
0.3%
11.0
1.2%
0.3%
116.7
16.9%
3.7%
158.6
18.4%
4.8%
175.9
19.2%
5.3%
688.6
100.0%
21.7% II
861.8
100.0%
26.2%
917.9 100.0%
27.4%
Spain
France
Other
Estimated
Foreign Total
I
I
,
Note: AP's are included in "othe('. Detail may not add to totals due to rounding.
Source: Treasury Foreign Portfolio Investment Survey benchmark as of end-year 1989
and monthly data collected under the Treasury International Capital reporting
system.
Aprtl29. tagS-1S
Department of 1M Tr8ll8jJry
Offlce of
$811.
M.t'\(~
Rl1IlrlCe .
NET AWARDS TO FOREIGN OFFICIAL ACCOUNTS Y
r - - - - - - - - - - - - - - - - - - - - - - - - - - , = -9.3
= - - - - - - $811.
10
10
3.9
3.8
6.0
5
5
o
0
-0.8
-5
-5
-1.0
-4.2
-10
-10
-15
-15
-20
Notes
-
-20
-18.6
c::J 5 years and over
1:::::::1 2-3 years
-25
Bills
-25
-23,7
-30L-~-.~1I~11~17.IV~-~~II~III~IV,L~~I~I'I~II'I~V~~~II~II~I"IV~-~~II~II'1~IV~-I~Y~-30
1991
1992
1993
1994
1995
1996
Quarterly Totals
y Noncompetitive awards to foreign official accounts held in custody at the Federal Reserve in
excess of foreign custody account holdings of maturing securities. Foreign add-ons prohibited
from October 18,1995 to March 29. 1996 to avoid exceeding thE debt Ii,nit.
o.pe.nmeMt of the Treuury
OffIce of Market Finance
11 Through April 26, 1996.
ApnI29,199S.'6
SHORT TERM INTEREST RATES
Quarterly Averages
%~--------------------------------~~----------------------~%
10
10
8
6
6
3 Month
Treasury Bill
4
1985
1986
1987
4
1988
1989
1990
1991
Deplllrtment ot the Treasury
Office o'f Mar1<el Finance
Jaru..I8.ry29,19Q6.17
SHORT TERM INTEREST RATES
Weekly Averages
%r-----------------------------------~------------------------~%
9
9
•
Prime Rate
8
8
Through
7
April 24
1
Commercial
Paper
•
6
......
6
~
7
....
-•
~
5
5
3 Month
Treasury Bill
Jul
Aug
Sep
1995
Oct
Nov
Dec
Feb
Mar
1996
Department of 1he Treuury
OffIce of Markot Rnance
APOI21il ,g96-18
LONG TERM MARKET RATES
Quarterly Averages
%
-
12
%
12
..
11
11
New Aa Corporates
10
10
--
--
---
9
Through
April 24
!
8
9
8
7
7
6
6
5L-__~__~____L -__~__- L__~____~__~__~____~~__~~5
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
Oepa:rtment of the Treasury
OtfIce of Mm&t FIMMe
1996
April2S, 1996-1£1
INTERMEDIATE TERM INTEREST RATES
Weekly Averages·
0/or-------------------------------------------------------------------~ 010
Through
April 24
8 -
....
... " - _-,
,'-", ..............
\
\'
t
FHLMC 30-Year
Conventional
.,
....
~"
7
,-"
,
, .. ,
,
' ........ --,'
," 110'
8
7
6
6
Treasury 5-Year
5L--J-U-I----A-U-9----s-e-p----~O-c-t--~N~O-v--~D~e~C----J~a~n~--~F~eb~--~M~a~r--~A~p~r~ 5
1995
1996
• Salomon 10-yr. AA Industrial is a Thursday rate,
Department of the Treasury
Offiee of Mart<et Finance
Apn129, '996-20
MARKET YIELDS ON GOVERNMENTS
%r----,-----,----~----_r----_r----,_----,_----~----r_--_.%
..-....I---,...--t---, 6.5
6.5
6.0
6.0
_..
5.5
-.- .---
5.5
%
7.0
5.0
•
5.0
6.5
January 29, 1996
4.5
4.5
26
28
30
5.5
4.0~--~~--~----~----~----~----~----~----~--~~--~
o
2
3
4
5
6
7
8
9
4.0
10
Years to Maturity
Departrr.ent of the Treaaury
April 29, 199&-21
Office of Market Financ:6
DOver 10 years
o
2500
2000
2-10 years
kJ
1-2 years
f:t~~m
1 year & under
_
Bills
1500
1000
o
1985
1986
1987
1988
1989
As of December 31
Department of the Treasury
Office 01 Mancel Finance
Apn129, 1996-22
PRIVATE HOLDINGS OF TREASURY MARKETABLE DEBT
Percent Distribution
Coupons
o 1·2 years
0
Over 10 years
02·10 years
GJ
Bills
•
1 year Be under
100%
14
80
33
60
40
20
o
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995 Mar '96
As of December 31
Depar1merrt of the Treasury
Apr!\ 29. t996-2"3
Office of Markat Fina~
AVERAGE LENGTH OF THE MARKETABLE DEBT
Privately Held
Years------------------------------------------------------~
-4-- June 1947
10
10 Years
5 Months
Months
March 31, 1996
5 Years, 2 Months
66
9
64
8
62
I
60L-L-L-~~~~~~~~~~
7
J
F M A M J
J
A SON 0
6
5
4
3
December 1975
2 Years
5 Months
1
2LLLW~~~~LL~~~~~LLLLUU~~~~~~~~~
194547 49 51 53 55 57 59 61 63 65 67 69 71
Oepartnent of the Trea5Ury
Office of MetI<tt Rn.anet)
April 29. 1996-24
MATURING COUPON ISSUES
May - September 1996
(in millions of dollars)
March 31,1996
Held by
Maturing Coupons
73/8%
41/4%
7 5/8%
57/8%
77/8%
0/0
6
77/8%
77/8%
61/8%
43/8%
8
%
71/4%
61/4%
7
%
61/2%
Note
Note
Note
Note
Note
Note
Note
Note
Note
Note
Bond
Note
Note
Note
Note
05/15/96
05/15/96
05/31/96
05/31/96
06/30/96
06/30/96
07/15/96
07/31/96
07/31/96
08/15/96
08/1 5/96 -01.21
08/31/96
08/31/96
09/30/96
09130/96
Totals
Y
V
Total
Federal Reserve
& Government
Accounts
Private
Investors
Foreign.1l
Investors
20,086
19,264
9,617
18,927
9,770
19,859
7,725
9,869
19,416
20,670
1,485
9,825
19,292
10,088
19,639
2,074
2,228
393
753
412
1,765
721
270
1,247
3,074
758
499
810
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On April 11, Treasury announced the call for redemption at par on August 15, 1996, the 8%
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TENTATIVE SCHEDULE OF ISSUES TO BE ANNOUNCED
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Monday
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1
6
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13
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Department of !he Treasury
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May', , 996-30
TENTATIVE SCHEDULE OF ISSUES TO BE ANNOUNCED
AND AUCTIONED IN JUNE 1996 11
Monday
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Thursday
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3
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6
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10
11
12
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30
19
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25
24
23
26
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.J' For settlement July 25
Department at 'the Treasury
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May 1, 1996-32
TREASURY DEPARTMENT LIBRARY
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