Full text of Treasury Bulletin : December 1988

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C.I

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TREASURY

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DEPARTMENT

DEPARTMENT OF THE TREASURY
FINANCIAL MANAGEMENT SERVICE
OFFICE OF THE COMMISSIONER
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^.

TREASURY BULLETIN

Fall Issue

December 1988
Office of the Secretary

Department of the Treasury
Washington, D.C.

Compiled and Published
by Financial Management
Service

ADDITIONAL FINANCIAL MANAGEMENT SERVICE
RELEASES ON FEDERAL FINANCES
U.S.

Sold on a subscription basis only (exceptions noted) by the Superintendent of Documents,
Government Printing Office, Washington, D.C. 20402 (phone orders: (202) 783-3238):'^

Daily Treasury Statement. Provides summary data on the Treasury's cash and debt
operations for the Federal Government. Pubhshed each Federal working day. Subscription price:

$152 per year (domestic), $190 per year

(foreign).

Monthly Treasury Statement of Receipts and Outlays of the United
ernment. Provides Federal budget
the surplus or deficit, and the
surplus. Preparation based

results, including receipts

means of financing

States

Gov-

and outlays of funds,

the deficit or disposing of the

on agency reporting. Subscription

price:

$22 per year

(domestic), $27.50 per year (foreign).

Consolidated Financial Statements of the United States Government (annual).
Provides information about
basis. Single

copy

Govemment

financial operations

on a consolidated

price: $2.25.

United States Government Annual Report and Appendix. Annual Report presents
budgetary results at the summary level. Appendix presents the individual receipt and
appropriation accounts at the detail level. Annual Report single copy price: $2.00;

Appendix

t

free

from Financial Management Service.

Treasury Bulletin subscription order form on inside back cover of this

issue.

TREASURY BULLETIN

Office of the Secretary
Department of the Treasury

Compiled and Published
by Financial Management

Washington, D.C.

Service

The Treasury Bulletin is
U.S. Government

for sale

by the Superintendent of Documents,
Washington, D.C. 20402

Printing Office,

.

In this issue

.

.

Items of Special Interest:

FISCAL SERVICE

•

A Status Report on the Fiscal Operations of the Government (Page
A

sweeping look by the Fiscal Assistant Secretary of the Treasury

making up the Fiscal Service' s financial leadership

role in

at

3)

each of nine major responsibilities

Government.

TAX POLICY
»

Excerpts from "Noncorporate Business Taxation: Before and After the Tax Reform
Act of 1986" (Page
An

8)

analysis of the effects that the

TaxReformAct of 1986 might have on noncorporate business

in terms

of tax revenue, incentives for noncorporate versus corporate investment, and individual marginal tax rates on
different types

of income from noncorporate business.

Contents
FALL ISSUE, DECEMBER 1988

TREASURY ISSUES
Page

FISCAL SERVICE
A

Status Report on the Fiscal Operations of the Government

3

TAX POLICY
Excerpts from "Noncorporate Business Taxation: Before and After the Tax Reform Act of 1986"

8

FINANCIAL OPERATIONS
FEDERAL FISCAL OPERATIONS
Analysis-Budget

results for the fourth quarter, fiscal

FFO-1. -Summary of

fiscal

1988

17

operations

19

Chart.-Monthly receipts and outlays

20

FFO-2 -On-budget and off-budget

receipts by source

21

Chart.-Budget receipts by source

23

FFO-3.-On-budget and off-budget outlays by agency

24

FEDERAL OBLIGATIONS
FO-1

—Gross

obligations incurred within

and outside the Federal Government by object class

26

FO-2. -Gross obligations incurred outside the Federal Government by department or agency

27

Chart— Gross Federal

29

obligations; gross Federal obligations incurred outside the Federal

ACCOUNT OF THE

U.S.

UST-1— Elements

changes

of

Government

TREASURY
in

Federal Reserve and tax and loan note account balances

30

FEDERAL DEBT
FD- 1

-Summary

33

of Federal debt

33

FD-2. -Interest-bearing public debt

FD-3.-Government account series

FD-4— Interest-bearing

FD-5. -Maturity distribution

FD-6.-Debt subject

34

securities issued by

Government agencies

and average length

35

of marketable interest-bearing public debt held

by private investors

36

36

to statutory limitation

Chart— Average length of the marketable debt
Chart— Private holdings of Treasury marketable debt by maturity
FD-7— Treasury holdings of securities issued by Government corporations and other agencies

38

TREASURY FINANCING OPERATIONS

40

37
39

PUBLIC DEBT OPERATIONS
PDO-1 .-Maturity schedule
Treasury

PDO-2.-Offerings

bills

of interest-bearing marketable public debt securities other than regular

46

of bills

PDO-3.-Public offerings

weekly and 52-week

44

outstanding

of

marketable securities other than regular weekly Treasury

PDO-4.~Allotments by investor classes

for public

marketable securities

bills

48
51

III

IV

Contents
U.S.

SAVINGS BONDS AND NOTES

SBN-1 .--Sales and redemptions by
SBN-2.-Sales and redemptions by
SBN-3.-Sales and redemptions by

53

series, cumulative

period,

all

series of savings bonds

period, series E, EE, H,

and notes combined

53

and HH

54

OWNERSHIP OF FEDERAL SECURITIES
OFS-1— Distribution

and type

of Federal securities by class of investors

56

of issues

0FS-2.-Estimated ownership of public debt securities by private investors

57

MARKET YIELDS
bid yields at constant maturities: bills, notes, and bonds
Chart— Yields of Treasury securities
MY-2—Average yields of long-term Treasury, corporate, and municipal bonds by period
Chart. -Average yields of long-term Treasury, corporate, and municipal bonds

MY-1 —Treasury market

59
60
61

62

FEDERAL AGENCIES' FINANCIAL REPORTS
FA-2.-Direct and guaranteed loans

64

Chart— Direct and guaranteed loans

68

INTERNATIONAL STATISTICS
INTERNATIONAL FINANCIAL STATISTICS
71

IFS-1.-U.S. reserve assets

IFS-2.-Selected U.S.

liabilities to

72

foreigners

IFS-3— Nonmarketable US. Treasury bonds and notes issued

to official institutions

and other residents

of foreign countries

72

73

IFS-4. -Trade-weighted index of foreign currency value of the dollar

CAPITAL MOVEIUIENTS
LIABILITIES

TO FOREIGNERS REPORTED BY BANKS

CM-l-1— Total liabilities by type
Chart— Liabilities to foreigners

IN

THE UNITED STATES
76

of holder

77
78

CM-l-2. -Total

liabilities

by type, payable

CM-l-3. -Total

liabilities

by country

79

CM-l-4. -Total

liabilities

by type and country

80

in

dollars

CLAIMS ON FOREIGNERS REPORTED BY BANKS

IN

THE UNITED STATES

CM-ll-1. -Total claims by type

81

Chart.-Claims on foreigners

82
83

CM-ll-2.~Total claims by country
CM-ll-3.-Total claims on foreigners by type and country reported by banks

in

the United States

SUPPLEMENTARY LIABILITIES AND CLAIMS DATA REPORTED BY BANKS
CM-lll-1 —Dollar claims on

CM-lll-2.-Dollar

nonbank foreigners
and dollar claims on, foreigners

liabilities to,

IN

84

THE UNITED STATES
85

in

countries

and areas not reported separately

86

Contents
Page

AND CLAIMS ON, FOREIGNERS REPORTED BY NONBANKING BUSINESS ENTERPRISES
THE UNITED STATES

LIABILITIES TO,

IN

CM-IV-1 -Total

liabilities

and claims by type

87

CM-IV-2.-Total

liabilities

by country

88

CM-IV-3.-- Total

liabilities

by type and country

89

CM-IV-4. -Total claims by country

90

CM-!V-5.-Total claims by type and country

91

TRANSACTIONS IN LONG-TERM SECURITIES BY FOREIGNERS REPORTED BY BANKS AND BROKERS
THE UNITED STATES
CM-V-1 .-Foreign purchases and sales

of long-term

CM-V-2. -Foreign purchases and sales

of long-term foreign securities by type

CM-V-3.-Net

foreign transactions

in

domestic securities by type

92
92

long-term domestic securities by type and country

93

Chart.-Net purchases of long-term domestic securities by selected countries

CM-V-4.-Foreign purchases and sales

CM-V-5— Foreign purchases and

of long-term securities,

by type and country,

sales of long-term securities, by type

and

IN

94
date

95

country, latest year

96

latest

FOREIGN CURRENCY POSITIONS

SUMMARY POSITIONS
FCP-l-1 .-Nonbanking firms' positions

98

FCP-l-2. -Weekly bank positions

98

CANADIAN DOLLAR POSITIONS
FCP-ll-1 .-Nonbanking firms' positions

99

FCP-ll-2.-Weekly bank positions

99

GERMAN MARK POSITIONS
FCP-lll-1. -Nonbanking firms' positions

100

FCP-lll-2.~Weekly bank positions

100

JAPANESE YEN POSITIONS
FCP-IV-1 -Nonbanking firms' positions

101

FCP-IV-2.-Weekly bank positions

101

SWISS FRANC POSITIONS
FCP-V-1 -Nonbanking

firms' positions

FCP-V-2. -Weekly bank positions

102
102

STERLING POSITIONS
FCP-VI-1. -Nonbanking firms' positions

103

FCP-VI-2.-Weekly bank positions

103

U.S.

DOLLAR POSITIONS ABROAD

FCP-VII-1. -Nonbanking firms' foreign subsidiaries' positions

104

FCP-VII-2.-Weekly bank foreign

104

office positions

VI

Contents
Page

EXCHANGE STABILIZATION FUND
ESF-1. --Balance sheet

107

ESF-2.-lncome and expense

1

07

SPECIAL REPORTS
TRUST FUNDS
Civil

service retirement

and

disability

112

fund

Federal disability insurance trust fund

113

Federal hospital insurance trust fund

114

Federal old-age and survivors Insurance trust fund

115

Federal supplementary medical insurance trust fund

116

National service

life

117

insurance fund

118

Railroad retirement account

Unemployment

trust

119

fund

Chart-Total receipts

of

major

Chart-Total expenditures

of

trust

major

trust

Investments of specified trust accounts

Chart— Major
U.S.

trust funds, total net

121

funds

122

funds

in

public debt securities

increase (decrease)

CURRENCY AND COIN OUTSTANDING AND

Nota.-Details of figures

Abbreviations:

r

may

not

add

to totals

because

IN

in

and agency

investments

CIRCULATION

of rounding.

represents Revised, p Preliminary, n.a. Not available.

securities by issue

1

23

1

24

127

I

VII

Nonquarterly Tables and Reports
For the convenience of the Treasury

Bulletin user, nonquarterly tables

and

reports are listed below along

with the issues in which they appear.

Issues

Winter

Federal Fiscal Operations
FFO-4. -Summary of internal revenue collections by States and other areas

.

.

V

Federal Agencies' Financial Reports

V
V

FA-1 -Report on financial position
FA-3. -Report on accounts

and loans receivable due from the

public

FA-4 -Report on operations

V

FA-5 -Report on cash flow

v

FA-6. -Report on reconciliation

V

Capital

Movements
and

CM-lll-2. -Dollar liabilities to,

dollar claims on, foreigners in countries

and

areas not regularly reported separately

Special Reports
Consolidated Financial Statements of the United States Government

Statement of
States
Trust

Liabilities

and Other Financial Commitments

Government

of the United
"V

Fund Reports:

Airport

and airway

Asbestos

trust

Black lung
Civil

trust

V

fund

v

fund

service retirement

v

fund

disability tnjst

and

disability

fund

Federal disability insurance trust fund

Federal hospital insurance

trust

fund

Federal old-age and survivors insurance trust fund
Federal supplementary medical insurance

Harbor maintenance

trust

trust

fund

>

V

Hazardous substance superfund

Highway

trust

v

fund

Inland waterways trust fund

x

Leaking underground storage tank
National service

life

fund

trust

fund

v

insurance fund
"»

Nuclear waste fund
Railroad retirement account

V

Reforestation trust fund

Unemployment

trust

fund

Investments of specified

trust

accounts

Spring

Summer

Fall

Treasury Issues

A

The Fiscal

Status Report on the Fiscal Operations of the

Service

While

ti-aditional

EFT

years to come,

1 he Department of the Treasury's Fiscal Service manages the

debt financing,

banking relationships, most of
the financial reporting, and most of the investment management
programs across Government.
actions,

all

of the

all

In the past few years, the Fiscal Service has directed its attenand resources to a comprehensive upgrade of its centi-al financial systems and activities.
am pleased to report that significant
progress has been made, particularly in cash management, debt
collection. Government securities operations, and ttie centi'al financial systems. These recent successes have produced substantial
dollar savings over the last 4 years. During that time we have successfully replaced 90 percent of our cenft-al financial systems. We
now have wide recognition in the private sector as a leader in innovative cash management practices, as a major force in electi'onic
funds transfer wiOi our Vendor Express program, and as a pacesetter in the application of online computer technology to the Federal

tion

I

is

cents. Consequently,
electi-onic

Management Service and

tiie

Bu-

way

to

for

many

make

pay-

costs about 4 cents, a paper check 30

FMS

has been the vanguard

in

tijming to the

transmission of payments and payment information as
in

its

direct deposit

it

that

forging the link-funds ti-ansfer with information-to permit

is

electi'onic

data interchange, the

wave

of ttie future in the Federal

Government. Electronic data interchange allows payment information to be electronically transmitted between Federal agencies and
vendors, significantty reducing paperwork and delays. This concept
is being tested with the Department of Transportation and the U.S.
Customs Service and promises to achieve major cost savings by
allowing inventories and orders to be reduced and monitored better.

and the NaStandards and Technology, FMS developed a
prototype electi'onic certification system that allows agencies to
In

tional

conjunction with the General Accounting Office

Institute

FMS, which

bureaus, the Financial

be with us

and Vendor Express programs. Payments by agencies to businesses can now be made electronically
tiirough the use of an automated clearinghouse. Dubbed "Vendor
Express,"
enables the Government to save about 26 cents on
every payment made. Currentiy, FMS is issuing 135,000 payments a
month, equivalent to over 1 million payments annually. FMS is striving toward making most Federal payments to businesses via electi^onics within 2 years. Vendor Express is an electi'onic application
reflected

will

reau of the Public Debt, have an exceptionally sti'ong career

will

the most cost-effective

of

and h'ansmit payment requests

automatically generate, certify,

securities market.

Botti

paper checks no doubt

An EFT payment

ments.

systems network that supports most Federal financial operations and
produces the U.S. Government Annual Report, the Treasury Bulletin,
and other consolidated financial statements for Government.
Through its central office and two bureaus, the Service manages all
of the payments, all of the collections, all interagency financial trans-

Government

in turn

to

disburses the funds. Technology being applied

allow properly authorized persons to electronically certify the

payment and

will

ensure that the payment

is

not altered subsequent

staff

have set strategic objectives, laid out tactical plans, and successhjlly completed project after project, system after system, and
the results have been substantial. Drawing on this expertise, we
have underway now a program to help other executive branch agencies upgrade their financial systems and products. This objective is
important not only for improved financial management in tiie agencies but to improve the quality of the financial Information these

to certification.

that

agencies supply Treasury

for

Federal-wide reporting.

up tiie
Government.

Fiscal

Service's

financial

to establish direct deposit as the
presumed, "normal" way of receiving Social Security benefit pay-

Social Security Administration

This status report covers each of nine major responsibilities that

make

The direct deposit of funds into a recipient's bank account in
a check reduces operating costs and is a safe, convenient
payment mechanism. By ttie end of 1989, 80 percent of Federal
salary and allotments, 60 percent of recurring Isenefit payments like
Social Security and veterans benefits, and 60 percent of vendor
payments will be made by direct deposit. FMS is worthing with the
lieu of

leadership

role

in

ments, while also installing
Social Security

new and

field locations. In

foreign countries

will

the

simplified signup techniques in
futijre,

recipients

also be able to receive benefit

who

and

reside

in

salary pay-

ments by direct deposit, and Federal employees will be able to have
advances and reimbursement payments sent electronically

travel

Gerald Murphy

through the automated clearinghouse for deposit to a checking or

Fiscal Assistant Secretary

savings account.

of the Treasury

The
curity's
1.

Federal Payments

percent,

As the Government's primary payments arm,
Management Service (FK^) each year sends out

unparalleled

in

the financial industry.

due

accounts.
the

Financial

a billion
(EFT) pay-

half

checks and over 250 million electi-onlc funds tt-ansfer
ments amounting to over $1 ti'illion annually. The effective delivery
payments to recipients exceeded 99.99 percent last year, a level
reliability

direct deposit participation rate for recipients of Social

supplemental security income (SSI) payments

of
of

in

FMS

large
is

measure

working

to ttie

witti ttie

many

is

Se-

only 14

recipients without

bank

Social Security Administt'ation to

automated teller machines (ATM) and
point-of-sale (POS) terminals using an ATM card. The goal is to
convert all benefit payments to electronics: eittier utilizing direct
deposit to existing bank accounts or allowing recipients to access
ttieir benefits through ATMs and POS terminals.

make SSI payments

tiirough

FISCAL SERVICE

Another automation
procedure that financial
that

an

error or

effort involves tlie notification

institutions

change has occurred

in

of cfiange

to notify Federal

use

agencies

the depositor account num-

number, or the type of
account (checking or savings) of an automated clearinghouse payment. Automation procedures have been established with those
financial institutions having ttie necessary hardvifare. The next phase

day information to Treasury and the agencies about these deposits
and continuous access to the system through terminals linked to the
computer.

ber, the financial institution's routing/transit

will

involve institutions without the

needed hardware, using Federal

Reserve banks as the conduit.

The Service

is

establishing a debit card test with

institution to replenish
will

a

financial

A magnetic striped debit card
cashiers to make cash withdrawals

imprest funds.

be used by imprest fund

The newly created credit card collection network allows agenMasterCard and VISA from the public for payment of
sales, other services, fees, fines, and certain types of debts. In less
than 1 year, 30 agencies are onboard with total collections of $70
million. By 1991, the annual volume should reach $6.5 billion.

cies to accept

through a nationwide ATK^ network.

In

assure the continuity of check processing operations and the seautomated data and systems; and to minimize the potential
misuse or abuse of systems.

curity of

automated

ttie collection,

The

deposit,

and

pilot international

reporting

cash con-

cash concenti-ation system. By ttie end of
overseas Treasury accounts will be

existing domestic

more than $14

1988,

to

FMS

centi'ation program successfully integrated international collections
witfi ttie

The 1987 redesign of the check payment and reconciliation
system enabled FMS to reconcile promptly every check paid to
check issue information, earning the Government well over $46 million in fiscal 1987 by identifying and resolving overcharges. In addition, $62 million was recovered from financial institutions for the
erroneous payment of checks. Security measures have been taken

1987,

of Federal funds collected abroad.

billion in

reported electronically for use on the next business day.

The current contract

for

cash concenti^ation services

is

expiring.

This provides an opportunity to further enhance an already progres-

be named "Cash Link" and will tie
together all electi-onic collection systems into a single data base for
agencies to use. This initiative seeks new approaches to streamlining cash concenti'ation services and to employing the latest techniques in facilitating the transfer of more than $380 billion in annual
sive system.

The new system

will

agency deposits.
2.

Federal Collections

One

of the Financial

Management

Service's

first priorities

has

been to develop a comprehensive cash management system that
emphasizes the fime value of the $2 trillion in the Government's
annual cash flow. Good cash management techniques like paying
the Government's bills on time and depositing its receipts by the next
business day have t)ecome the standard for agencies. Like payments, FMS has given the highest priority to collecfing and depositing fijnds electronically and in the process has created services to
speed the collections process and to ensure fimely disbursements.

In 1987, FMS began collecting Internal Revenue Service (IRS)
estimated tax payments through the lockbox network at four IRS
service centers. The inclusion of IRS lockbox collections doubled ttie
dollar flow through the system. In 1989, the remaining six IRS serv-

ice centers

utilize

will

the lockbox networi<, resulting

in

savings

projected at $41 million

FMS is working with ttie Department of Defense commissaries
accept debit cards at the point of sale to pay for groceries and
other items. Simply by presenting an ATM card, customers will be
able to ti-ansfer funds from their bank account to ttie Department of
to

Defense's account.

Good cash management techniques
paying the Government's

and depositing

its

bills

The Federal

like

tax deposit

system

is

a paper-based system

re-

sponsible for collecting withholding taxes paid by corporations.
These taxes are approximately 80 percent of ttie Federal Govem-

on time

ment's taxes and represented more

receipts by the next

In

fiscal

1989,

FMS and

electronically collect

business day have become the standard

system

is

planned

and

IRS

will

$720 billion in fiscal 1987.
be redesigning ttie system to

ttian

report these ftjnds. Pilot testing of

for fiscal

ttie

new

1991 with phased implementation sched-

uled for fiscal 1992.

for agencies.

Part of FMS' responsibility is to evaluate agencies' collection
and disbursement cash flows. Now a state-of-tiie-art PC-based system utilizing artificial intelligence will allow analysts to key in pertiis

The Treasury lockbox network, which consists of seven banks,
and processing $26 billion annually for more
The expanded use of the automated

currently collecting

than 200 agency accounts.

clearinghouse collection process has been included

in

the

3.

The Treasury general account cash concentration system
450 depositary financial institutions through 5

electronically links

billion

annually

in

deposits to the Treasury's account the next business day.

The FedWire deposit system electronically processes 200,000
and $100 billion in receipts annually, providing same-

transactions

of the

Government.

new 1988

5-year lockbox agreements.

concentrator banks to consolidate and wire $132

nent cash flow information ttiat will tie evaluated electi-onically to
determine the most effective mechanism for moving funds in and out

Debt Financing

The Bureau of the Public Debt has recentiy made several imchanges in the administration of the Federal Government's
debt. These changes have impacted both ttie marketable and nonportant

marketable securities programs.

The current

direct

TREASURY DIRECT

access system

for

marketable securities,

ttie

book-entry securities system, went intooper-

FISCAL SERVICE
August 1986 and now contains

ation in

value of over $30

billion.

1.1 million accounts with a
is an interactive sysopen an account at any Federal Rethe Bureau, and have that account serv-

TREASURY DIRECT

A major study documenting the success of the tax refund offset
program was published Legislation extending the program was

tem, whereby an investor can

subsequently enacted.

serve bank or branch or at

recommendations and guidance on implementing a comprehensive
debt collection and writeoff process was published and implemented
across the Government Guidelines issued by FMS allow agency

iced at any other location or through the mail. This system, which

took over 4 years to develop,

was

the product of a joint Bureau

Federal Reserve Bank of Philadelphia

initiative.

The system

tained at the Philadelphia Fed, though the Bureau

One

is

is

and

main-

responsible

for

changes to be made to
the system was a "permissive conversion" option, whereby investors
can now even convert their older paper registered certificates to
supervising

operation.

its

of the recent

A

writeoff task force report

which provided

managers to handle debts in a businesslike manner while ensuring
agency compliance with existing laws and regulations. The
guidelines allow agency inspectors general to evaluate more efficiently and expeditiously management and operational problems that
may need improvement.

book-entry.

Future plans include a major review of the Government's pracIn

the nonmarketable arena, several

changes have been made

tices

which

will identify

what additional private sector methods can
management.

processing of U.S. savings bonds. These changes include a
new issuing process called the centralized distribution system, which

t)e

the centralized distribution system,

a pilot project in the State of Ohio. Under
all savings bonds purchased over
be acquired through the network of over
40,000 issuing agents nationwide; however, instead of receiving the
bond at the time of purchase, it would be mailed to the purchaser
within 15 business days from a central processing facility. This
change could produce significant savings reducing the fees paid to
financial institutions and providing computer rather than paper input

Standardized guidelines are being developed which will summarize the technical and legislative requirements with which agen-

the counter would

cies

to the

is

currently being tested as

to the

still

a new redemption process called E2 CLEAR was
officially introduced nationwide on October 1. 1988. EZ CLEAR allows redeeming agents to process paid bonds in the same way that
they process checks using the automated check processing technology rather than a largely manual process. Under EZ CLEAR, bonds
can be sorted separately or mixed with other cash items at the option
of the

paying agent.

combined with Bureau efforts to have all
done on tape, will eventually end the processbond stubs by the Bureau. Instead, all the procbe done through computer tape or optical medium

ing of paid tx)nds or
will

(such as optical disks or optical tape).

4.

Credit

Management

a few short years the Financial Management Service, workmajor credit agencies (Departments of Agriculture,
Education, and Housing and Urban Development, and the Small
Business and Veterans Administrations), has helped the Government improve the quality of its portfolios and has promoted significant improvement in agency debt collection practices.
In

ing with the five

Under this program, the Government has realized collections
$315 million ft-om tax refund offset for calendar year 1988 (total
collecfions since inception of program totaled $838 million); $52
million from Federal salary offset; and $1.3 million from the GSA
of:

debt collection

December
In

services

contract for private collection

(effective

1987).

1988,

FMS, working

with the Office of

Management and

Budget and General Services Administration, improved and enlarged
the an'ay of services available to agencies from private debt collection

agencies.

A

series of

management and

were published, including guidance

operational guidelines

for using the

GSA debt collection

contract for collecting delinquent debt

"adjunct"

services; using Federal salary offset;

reporting

written-off

managing the

full

credit cycle.

The

Fiscal Service

cash management

responsibilities are di-

The

flow operations.

Office of the Fiscal Assistant Secretary

is

responsible for

one of the Department's most vital functions in ti'acking, projecting,
and monitoring the Federal Government's overall cash flows. This
function provides for institutional cooperation between the Treasury
and the Federal Reserve System in managing Treasury's cash
balance. It also determines the amount of borrowing or repayment of
debt by the Treasury with sufficient timeliness and accuracy to allow
for seasoned and deliberate debt management policies.

initiatives,

payroll savings issues

essing work

in

vided three ways: cash forecasting and financing. Federal cash man-

addition,

Both the

must comply

Cash Management

agement programs, and cash

Bureau.

In

5.

applied to improve credit

debts

to

IRS as income

and obtaining other
writing off debts; and

to the debtor.

Cash and Debt Management compiles estimates
and outiays of the Federal Government on a daily
basis for 6 to 9 months into tiie fijture and the same data on a
monthly basis for up to 21 months into tiie fijture. Estimates of
Treasury borrowings are projected on a daily basis for up to 6 to 9
months into the future to manage the debt within statijtory limitations.
Cash and debt forecasts are used as the basis for decisions relating
to the management of Treasury tax and loan accounts and the
amounts and timing of Treasury financing.
The

Office of

for all receipts

During 1987 and eariy 1988, the systems supporting this ftjncwere upgraded to a microcomputer local area networi< tiiat provides full conti-ol over both present and historical data by the
forecasting analysts using a range of analytical software that has
improved the timeliness and accuracy of the forecasting and finanction

ing decisions.

The Financial Management Service promotes sound cash management through a Govemmentwide cash management program.
Since interest on (he national debt has tiecome one of the largest
items in the Federal budget, improved cash management ranks high
on the Government's list of priorities. FMS has earned out a program
aimed at identifying every cash flow in every agency in Government.
In cooperation with each agency, FMS has established improvement
objectives for each cash flow and has negotiated scheduled implementation with each agency. This multiyear progrsim is saving a
billion and a half dollars a year in cash management improvements.

The

Financial

Management Service

is

also responsible for

man-

FISCAL SERVICE
aging the Government's cash flow operations. These activities are
in the sections labeled "Federal Payments" and "Federal

8.

Agency Financial Systems

described

Less than 3 years ago some

Collections."

had no

6.

Investment Services and Counseling

The

Financial

Investment

Management Service

functions as the central

Government agencies

facility for

that

have

of the largest

Federal agencies

upgrade their financial systemsdocumented concerns and audit findings expressed about the quality, incompatibility, and redundancy of
the hundreds of Government financial systems that existed.
this

strategic or tactical plans to

was

in

spite of repeated,

statutory in-

vestment authority. This responsibility entails the processing of daily
investments and redemption transactions as requested by various
funds and maintaining ledgers and other supporting documents to
support these transactions. There are currently 160 Government

funds with over $525

billion

invested.

order to provide Federal agencies with the knowledge and

In

technical expertise required to develop

and manage

individual in-

vestment programs, the Service has developed the Federal investment counseling program. The program has been designed to assist
new and existing investment programs through seminars,
workshops, and individual guidance and training sessions. It provides support to administrator agencies in the investment planning,
management, and reporting areas. Through discussions, the Service
assesses the agency's investment needs and assists it in developing
a strategy to meet those needs.
In

the planning phase, the Service

actual operation

and needs

will

direct

its

analysis at the

of the investing fund. This involves

an

overview of the fund's receipts and disbursement trends to help the
investing agency plan future investment decisions. When these
needs are identified, FMS assists the agency in selecting securities
that

The Financial Management Service is responsible for managing the availability
and integrity of Governmentwide financial information.

In

February 1987 the Financial Management Service was des-

ignated the lead agency with operational responsibility for improving
financial
to: (1)

management systems. The

objectives of this program are

establish financial systems efficient

and economical, both from

an agency perspective and from a Governmentwide perspective; and
(2) establish financial systems that generate useful, timely, and reliable information. In order to attain these goals FMS works with
agency officials to monitor agencies' progress in:

•

meet those requirements.

Meeting negotiated goals and milestones and identifying

noteworthy accomplishments,
7.

Central Accounting Systems and Reporting

• Evaluating agencies' systems and operations, and

The

Financial

and

the availability

As

FMS

such,

is

Management Service
integrity of

is

responsible for managing

Governmentwide

financial information.

information as the Government's

official

The Federal Government's

budget receipts and outlays.
outlays,

reducing the deficit and operating more

assets,

and

efficiently. In part-

OMB

and other agencies, FMS works to improve the
information systems from which important financial management
decisions are made. FMS has therefore initiated improvements to its
budget execution system-the one that tracks the Government's
receipts and oudays-to upgrade it to a data base management ennership with

vironment.

This

effon-the

for

information relating to agencies' financial systems.

In

receipts,

which represents trillions of dollars of financial
resources-are reviewed to identify potential savings and economies
liabilities-each of

to aid in

• Providing consulting services and serving as a clearinghouse

the central source for such fundamental financial

STAR

Project-will

the

first full

year of

this

program's existence,

FMS

reviewed

agencies' financial systems improvement plans and their Federal

managers' financial integrity reports. With OMB specific realistic
goals to improve financial systems were negotiated with each of the
23 largest agencies. These goals included the establishment and
implementation of the U.S. Government Standard General Ledger
and the use of off-the-shelf software and cross-servicing arrangements to minimize the number of different systems throughout the
Government.

provide

Additional financial systems priorities included:

Governmentwide financial management information more accurate,
and accessible. STAR will be available to those central agencies which, along with Treasury, play critical roles in managing the
Government's finances.
timely,

• Establishing standard coding structures.

Having

FMS

has also planned an additional major enhancement to its
referred to as "STAR PLUS." STAR
represent the Government's "income statement" and STAR

financial
will

PLUS

management system

will

financial

represent

its

management

"balance sheet."

STAR PLUS

will

the

ability

to

produce departmentwide

financial

reports,

• Establishing a single primary accounting system,

integrate

information relating to the disposition of the

Government's assets and liabilities with traditional budget execution
information. Once combined, FMS will be able to provide-for the first
time ever-a unified source for the management of all major
Governmentwide financial information. FMS projects that STAR
PLUS will be developed and operational by the eariy 1990s.

cial

• Providing interfaces between subsidiary and program
systems with the primary accounting system, and

finan-

• Complying with section 4 of the Federal Managers' Financial

FISCAL SERVICE

Integrity Act.

ment Service's commitment
tems. Cross-servicing

By tlie end of 1988, 19 of the 23 agencies are expected to have
implemented the U.S. Government Standard General Ledger. The
remaining four agencies will have begun using the Standard General
Ledger by 1991 as they complete the Installation of their
departmentwide accounting systems. When this is accomplished,
financial data at a high level will finally be consistent and comparable
between agencies and throughout the Government. Twelve agencies
now have a single primary accounting system, and FMS is monitoring the efforts of the remaining nine agencies to assure they meet

is

to

improve financial management sys-

being offered to agencies on a reimbursable

and maintaining costly agency
Agencies will also benefit as FMS will provide
traiining and assistance, maintenance, and system upgrades and will
assure compliance with OMB Circular No. A-127 and the Joint Financial Management Improvement Program 'Core Financial Systems Requirements." The FMS-supported systems will provide a full
range of accounting and financial management capabilities via
basis as an alternative to developing
specific systems.

Treasury Regional Financial Centers. In addition to cross-servicing,
consulting services are also being offered on a range of topics.

the target dates.

FMS

has a data base of information on agencies' financial systems and their improvement projects. With this information as the
basis, FMS expects to expand its clearinghouse role and wori< with
other Federal financial organizations to share the accomplishments,
problems, and solutions of agencies' efforts to improve their financial
systems.

9.

Professional Assistance to Agencies

The Customer Assistance Staffs have made the full regional
FMS products and services a reality. Begun in 1984 as a
pilot at the Kansas City Financial Center, the 'CAS Concept' has
expanded to all seven regional financial centers. The CAS staffs
support 31 major efforts in the areas of payment systems, collection
mechanisms, claims and reconciliation, asset and liability management, comptrollership, Governmentwide accounting and reporting,
financial management policy, and consulting/advising. They provide
delivery of

assistance to
tutions

Accounting cross-servicing and consulting services are now
being offered to Federal agencies as part of the Financial Manage-

well

as

FMS

client

groups

in

Federal agencies, financial

and Federal Reserve banks. State and
in

the private sector.

local

insti-

governments, as

V

Excerpts from "Noncorporate Business Taxation: Before and After the
Tax Reform Act of 1986"

by Susan C. Nelson

I.

business. Section IV draws

INTRODUCTION

The Tax

Reform Act

of

1986 (TRA) marked a watersfied

history of taxation in this country. For the

first

in

the

time since the 16th

Amendment

permitted true income taxes, the top statutory tax rate
on corporations will exceed the top rate on individuals. This fact,
coupled with other changes in business taxation included in TRA,

has prompted concerns that TRA's attempt
rations relative to individuals
for

some business

may

in

on corpo-

significantly increase the incentive

to shift into the

corporation tax, resulting

to raise taxes

noncorporate sector to avoid the
of the corporate tax base.

The birth of master limited partnerships
(tVlLPs) since the early 1980s was taken as one piece of evidence;
of
the corporate income tax as another.
importance
declining
the
in

tentative conclusions.

ni. NONCORPORATE BUSINESS AFTER THE TAX REFORM
ACT OF 1986

The Tax Reform Act raised taxes on business by expanding
income subject to tax and eliminating or reducing

definition of

credits for certain activities. At the

same

time,

it

the
tax

lowered taxes by

reducing the corporate and individual tax rates applied to most of
that income.

an erosion

Even before TRA, questions were frequently raised whether
business had been "disincorporating," either shifting out of the corporate sector or starting in the noncorporate sector at a faster rate
than

some

the corporate.

The question of why revenues from corporate income taxes
been falling was recently addressed by Auerbach and
Poterba.1 They demonstrate that corporate tax revenues have
indeed fallen relative to GNP, corporate assets, and total Federal
receipts since the early 1960s. They find that the explanation for this
lies more in falling corporate profits than in legislative changes. They
do not address the question of whether falling corporate profits have
been accompanied by increasing profits or business income in the
noncorporate sector. If that were true, then possibly, but not necessarily, the tax burden on all business and capital might not have
fallen, even though less income was subject to the double tax on

The Tax Reform Act will affect the
growth of the noncorporate sector by altering the relative attractiveness of invest-

ment

in corporate

and noncorporate

have

dividends.

This paper examines trends

TRA and
after
tion

analyzes

TRA.z Section

III

turns to

TRA

some

in

the noncorporate sector before

of the factors that will influence the future

addresses the pre-TRA experience, and secand beyond.
II

business.

in

general, provisions of

II

II

that

changed the

definition of

on one sector than the other. Major examples of base broadening
that applied across the board are the modifications to the accelerated cost recovery system, elimination of the investment tax credit,
reduced deductions for business meals and entertainment expenses,
uniform cost capitalization rules, and repeal of bad debt reserves.

One base-broadener

applicable only to passthrough entities and

similar firms that are subject to the corporate

income tax (personal

the requirement that the fiscal years of these
entities correspond to the taxable years of their major partners or
owners. 11 At the individual level, the passive loss limitations,
service corporations)

Since taxes on income from noncorporate business are not
separately reported on tax returns and. therefore, cannot be directly
focuses on measures of
observed like corporate taxes, section
income used in the National Income and Product Accounts and income reported for tax purposes in the corporate and noncorporate
sectors in order to draw inferences about trends in the two sectors.
also looks at the growth in MLPs and examines informaSection
tion from 1985 tax returns for the majority of IVlLPs in existence then.
In section III, the paper examines effects that the Tax Reform Act
might have on noncorporate business in terms of revenue, relative
incentives for corporate and noncorporate investment, and individual
marginal tax rates on different types of income from noncorporate

TRA

business income subject to tax and that altered tax credits available
to business made no distinction between corporate and noncorporate activities, though some changes of course had more impact

changes

in

the

is

minimum

tax.

and elimination of the 60-percent exclubroadened the tax base of income

sion for long-term capital gains

from business and capital.

The remainder of this section examines three major effects that
these changes from TRA will have on business: (1) They will increase the taxes paid by corporate and noncorporate business. (2)
will alter the incentives to invest in the corporate relative to the
noncorporate sector. (3) They will lower the marginal tax rates paid
on income from noncorporate business.

They

TAX POLICY
A. Revenue

ing
in

$31

Table 7 shows the 5-year revenue effects on corporations and
Individuals of the major provisions that broadened the base of busi-

ended.

ness income taxes. Overall, changes in the measure of business
income subject to tax and allowable tax credits will raise corporate
taxes by $250 billion from FY 1987 through 1991. (Some of these
provisions, notably many of the changes in accounting and deprecia-

B. Incentives

tion, reflect

changes

in

the timing of tax

long-term level of taxes, however.)

maximum

46 percent

of

to

A

34 percent

liabilities

reduction

more than

in

the

a
base

tax rates from

in

offsets $1 19 billion of the

in corporate taxes of $131 billion. This
a 29-percent increase compared to the 5-year level of
corporate taxes that would have been expected without TRA.

broadening, for a net increase

amounts

to

For individuals, table 7 shows a 5-year tax increase from base
broadening on business income of $68 billion. The benefit of individual rate reduction on this income is more difficult to calculate. Preliminary estimates from the Treasury Department's Individual Income

Tax Model suggest

that reducing rates lowers taxes

TRA

The difference in total effective tax rates on income
the two sectors is an important indication of the incentive to invest
one sector over the other. Economists disagree, however, on how
to measure these tax rates, and the answer to whether TRA made
noncorporate investment more or less attractive than it was before,
relative
to
corporate investment, depends on the approach
selected. 13 Three factors that particularly influence the comparison
of effective tax rates are: (1) the ratio of

asset mix used

/.

tax rates,

this

income

in

represents a 60-percent increase.

in

alternative perspective on the tax

chosen, and

(3) the

For equity-financed invesiments, the disad-

caused by the double taxation of
known. By lowering both corporate and individual
TFtA tended to reduce this disadvantage.

of the corporate sector
is

well

For debt-financed investments, interest deductibility means that
such investments face only one level of tax in both sectors. The
higher statutory tax rate

changes for individuals
might view the passive loss rules of TFIA more as a tax increase on
the income being sheltered (generally wage and salary income) than
on income from noncorporate business. Taking this approach and
excluding the tax shelter provisions from table 7's estimate of base
broadening would lower the 60-percent increase to a 15- to 20percent increase in individual taxes on income from noncorporate

An

to equity in the financ-

the calculations.

Debt/Equity.

increase from broadening the base, for a net tax increase of about
$40 billion on individual income from noncorporate business. Comthis

debt

ing of the investment, (2) the "view" of dividends

dividends

TRA,

growth of the noncorporate sector by altering
and noncor-

in

on income from

taxes that would have been expected on

affect the

was

porate business.

vantage

to the

coming

in

noncorporate business by about $25 to $30 billion over the 5
12 This amount offsets about 40 percent of the $68 billion tax

pared

will

of that

,

to accelerated realizations before the exclusion

the relative attractiveness of investment in corporate

years

the absence of

revenue from FY 1987-91 with most

billion in

FY 1987 due

in

the corporate sector

means

that the value

allowances are larger for a corporation than a
noncorporate firm. Consequently, debt-financed investment in
depreciable property is tax favored in the corporate sector relative to
of tax depreciation

By lowering tax rates overall and reducing
on alternative investments, the Tax
Reform Act reduced the advantage of the corporate sector for debt-

the noncorporate sector.
differentials

among

tax rates

financed investment.

business, lower than the 29-percent increase calculated earlier for
corporations.

The "View" of Dividends. To the extent that corporate investfinanced with equity, the return would come to the stockgains. The "old view" of
dividends taxation says that taxes on both dividends and capital
gains affect the after-tax return on equity. The "new view" implies
that taxes on dividends have been capitalized in the value of the
equity and, therefore, do not burden the return to new equity. The
capital gains tax is then the relevant tax on equity-financed investment. Since TRA raised capital gains taxes but lowered taxes on
dividends, corporate taxes would tend to increase more under the
2.

ment

is

holder as either dividends or capital

Evidence available suggests that the Tax

Reform Act narrowed the

differentials in

effective tax rates

between the corporate

and noncorporate

sectors,

and

"leveled

new

on which investment
decisions are made.
the playing field"

3. Asset Mix. The types of assets making up the capital stock
and investment in the corporate sector differ from the noncorporate
sector. In particular, a larger fraction of corporate than noncorporate

Several qualifications need to be kept in mind in interpreting the
estimate of the effect of rate reduction on income from noncorporate
business. First, in this amount the rate cuts are "stacked first," that is,
calculated before any other changes from

Stacking the rate cuts

first is

the

way

TRA have been made.

that Treasury

Committee on Taxation usually present the
reform provisions. Stacking the rate cuts

and the

Joint

effects of separate tax

first

also

means

that the

in incomes that would come in
TFIA provisions, and, thus, may understate the amount
rate reduction. Second, these estimates of the effect of rate cuts

esfimates do not include changes

response
of

to

do not include the

effect of eliminating the capital gains exclusion

these gains are from sales of corporate shares and
other noncorporate business sales. Treasury estimates this as raissince

many

of

than the old view of dividends taxation.

investment is in equipment, which was the type of investment on
which TF^ raised taxes the most. Consequently, estimates of the
effective tax rates for the corporate and noncorporate sectors as a

whole would tend to show larger increases in the corporate rate,
whereas asset by asset the differences would be smaller. Whether
changes in effective taxes should be compared asset by asset or
over all capital In the sector depends in part on the question being
asked. The asset-by-asset approach is useful for determining how
TRA changed the attractiveness of the two sectors for a given investment. Comparing changes in overall rates might suggest how the
growth in overall investment will shift between the sectors Since
investment in equipment will become less attractive relative to other
types of investment, TF^ may tend to shift total investment out of the

10

TAX POLICY
corporate sector and into noncorporate business.

amounts

indicates different

of

total

income: Taxpayers with net

losses had lower marginal rates than taxpayers with net gains from
Fullerton, Gillette, and Mackie (FGM) estimate the effects of
these various factors. u Like most economists, they find that, before
TRA, effective tax rates on income from corporate investments generally exceeded taxes on noncorporate income, except for fully

debt-financed projects.

FGM

raised effective tax rates

sectors for investment

in

in

also conclude that TFIA consistently

both the corporate and noncorporate

equipment and

structures,

and frequently

lowered it for inventories and land. With TRA, the tax advantage to
the corporate sector for fully debt-financed investments persists but
is substantially reduced, overall and on an asset-by-asset basis. For
investments that are financed by equity, in whole or in part, the overall tax advantage remains with the noncorporate sector but rises or

depending on the assumptions. On an asset-by-asset
basis, however, TRA reduces the tax advantage of the noncorporate
sector under most assumptions for equity investments.

falls slightly

same type of business, either because the losses were large
enough to bring down their total income or because they had smaller
amounts of other income. Partnerships are the category where the
marginal rates on gains and losses are closest (33.4 percent and
the

28.9 percent, respectively), which

results generally support the conclusion that TFIA

"leveled the playing field" by narrowing differentials in effective tax
rates

between corporate and noncorporate

financing.

Act

In

addition,

FGM's

may have reduced

setting

consistent with a view that

many

The

differences

of other income.

marginal rates before and after

in

TRA

are

striking.

(1)

On

net and for returns with gains, each type of business

received a reduction

S gains showed

The range

different types

in

marginal tax rates. Returns with subchapter

the largest cut, from 43.6 percent to 27-28 percent.
of marginal tax rates

narrowed

substantially, from

on returns with gains of
a 15-point range to only

a5-point range.

sectors, given the type of

findings suggest that

the attractiveness in

up businesses as MLPs, which tend
as corporations.

amounts

with substantial

(2)

FGM

The

is

partnership losses reflect tax shelter losses incurred by taxpayers

the Tax Reform

many circumstances

to

of

be heavily financed by

The marginal rates on returns with passive losses from
S corporations or partnerships have dropped extremely
low-5,5 percent and 9.0 percent, respectively.
(3)

sutjchapter

equity, instead of

The

implications of the low marginal rates on passive losses

are interesting.

C. Marginal Rates

On one

passive losses have
At the individual level, major changes in the taxation of income
from noncorporate business resulted from tax reform's lower marginal tax rates for individuals and limitations on passive losses
(including

minimum

tax treatment of allowed passive losses).

implications of these

changes can be drawn from examining

Some

effective

individual marginal tax rates, before and after TFIA, on income from

noncorporate business. The top half of table 8 presents, by type of
business and by gain or loss, the average marginal rates that would
have prevailed in 1988 if pre-TFiA law had continued, and the bottom
half of the table presents marginal rates expected under TRA for that
year. These rates were calculated using the Treasury Department's
Individual

Income Tax Model. Taxpayers were

classified as having

gains or losses, and passive or active gains or losses, according to
their net

income from a

particular type of business.

in

hand, the low rates indicate
the 1988 tax year.

When

how

little

value

the phase-in of the

passive loss limitation is complete in 1991, passive losses will have
even less current-year tax value. On the other hand, these same low
rates would be applied to additional passive income. If passive in-

come became

widely available to taxpayers with passive losses, the

revenue loss could be substantial. On a dollar of partnerincome in 1988, table 8 indicates that more than half the tax
revenue could be lost if it were deemed passive income and earned
by a partner with passive losses, compared to the taxes it would
generate if it went to any other average partner: 9 cents vs. 22 to 25
cents. These marginal rates indicate the importance for protecting
revenue of the Treasury regulations to distinguish passive income
from portfolio income and the provision of the Omnibus Budget
Reconciliation Act of 1987 that characterized income from MLPs as
potential

ship

portfolio

income.

capture intertemporal effects of the provisions. For example, they do
not include the value of tax credits for minimum taxes previously paid

An additional consequence of a broad definition of passive
income would be an efficiency loss. If partners with gains or active
losses facing a marginal rate of about 23 percent generally require
an 8-percent pre-tax return on an investment, taxpayers with passive
partnership losses would require only a 6,8-percent pre-tax return to

on allowed passive losses. They do not

achieve the

The marginal rates in table 8 reflect most of the provisions of
and post-TFlA law that apply to individuals in 1988, including
minimum tax and passive loss rules, but the rates estimated do not
pre-

reflect the

currently disallowed (deferred) passive losses that

present value of
will

be allowed

the

minimum

tax provisions

is

a prepayment of taxes.

and varied degree of uncertainty to the value of future taxes or
any choice of discount rate difficult. In addition,
were ill-suited for estimating the intertemporal
components of the marginal rate. Consequently, the figures in table 8
reflect changes in 1988 taxes that taxpayers would see with a
change in 1988 income or loss.
large

tax savings, making
the available data

rates

show

IV.

after-tax return.

CONCLUSION

Ideally, the

marginal tax rates should include an estimate of the present value of
these intertemporal aspects. In practice, taxpayers probably attach a

The pre-TFlA

same

in

the future, nor do they capture the fact that the real cost of most of

several interesting characteristics of

taxpayers receiving income from noncorporate businesses. The
disparity in rates among taxpayers with different types of income

This paper has surveyed issues and data related to the taxation
noncorporate business before and after the Tax Reform Act of
1986. Before TRA, although income from business and capital ap-

of

to be shrinking relative to the rest of the economy, this trend
appear noticeably stronger in the corporate than in the noncorporate sector. In terms of income reported on tax returns, the rate
of growth in corporate income was slowing but this was not true for

peared
did not

noncorporate business.
At the individual

level,

where most taxes on income from non-

was evidence that taxes on income from noncorporate business may have represented a declining
corporate business are paid, there

11

TAX POLICY
share of total individual incxsme taxes. In addition, a gap appeared to
be growing (between income of subchapter S corporations and partnerships appearing on the business returns and on individual
returns. Although the explanation

marginal tax rates. Corporations

will see a 29-percent increase over
would have paid if TRA had not been enacted. Indipay 60 percent more on income from noncorporate busi-

the taxes they
viduals

will

is not clear, some of the missing
S income may flow to trusts and estates, while undermay also be involved For partnerships, much of the appargap may reflect income going to partners other than individuals.

ness with TRA (or 15 percent more if the tax shelter provisions are
excluded). Although taxes will be higher in both sectors, evidence
available suggests that TRA narrowed the differentials in effective

Indeed, data for 1 983 indicate that corporations and other types of
partners receive a considerable fraction of partnership income, par-

"leveled the playing field" on which investment decisions are made.
At the individual level, taxpayers with income from noncorporate

subchapter
reporting

ent

ticularly in the

After

ness

will

mining and transportation industries.

rates

between the corporate and noncorporate

sectors,

busi-

reductions

in spite of

Table 7-Revenue Effects of Business Provisions of

tfie

in

passive losses that they

will

lems

easily available to offset passive losses.

if

passive income

is

generate revenue and efficiency prob-

Tax Reform Act of 1986, by Corporate and Individual Taxpayers (FY 1987-91)

Provisions ol

TRA

Repeal of Invsslment lax credit
Modify accelerated cost recovery system
Accounting

27.3

Minimum tax

123 2

-.2

2.4

5.9

57 5

4.I

19,9

Insurance products and conpanles

1 1

Foreign lax provisions

.9

,2

10.5

3.3

7.8

.6.4

6.1

General business and corporate

1.0

3.0

Tax-exempt bonds

3.7

Compliance--busines8
Energy, agriculture, natural resources, timber
Self-employed health premiums

1.0

Expenses

lor

business and enienainment

Financial inslrtutions

7.2

Repeal general utilities
Corporate capital gains

Miscellaneous aedits

5.0
I.9
1.8
.6

-.8

RSD

-1.0

-3.7

Tax shelters

29.6

-4.0

SUBTOTAL, base broadening

67.7

251 .1

Rate reductions

25-30

119

Net change:
With shelter provisions
Without shelter provisions

38-43
9-14

131

Department of the Treasury
Tax Analysis

Ottlce of

SOURCE: Midsesslon Review Revenue

Footnotes on following page.

Estimates

ol the

Tax Reform Act

and

business consistently received cuts in the marginal tax rates on that
income. The passive loss limitations so reduced marginal rates on

TRA, income from both corporate and noncorporate
receive substantial tax increases

tax

of

1986, Office of Tax Analysis, Department of the Treasury.

131

12

TAX POLICY
Table 8-Marginal Tax Rates on Noncorporate Income of Individuals Before and After TRA, by Type of Business (1988 Levels of
Income)

Type

Subchapters

Sole proprietor
Rental

26.5
22.7
31.9

Partnership

31 .0

Net gains

Post-TRA law

Sole proprietor
Rental

21 .6

20.2

Subchapter S

19.4

Partnership

1

7.1

na

of

Income or

28.7
30.9

43.6
33.4

loss

16.4
19.0
13.8

28.9

Financial Operations

15

FEDERAL FISCAL OPERATIONS
INTRODUCTION
Background

collections.

Section 114 of the Budget and Accounting Procedures Act of
1950 (31 use. 3513a) requires the Secretary of the Treasury to
prepare reports on the financial operations of the U.S. Government.

collections.

The first three Federal fiscal operations (FFO) tables are
published quarterly and cover 5 years of data, estimates for 2 years,
detail for 13 months, and fiscal year-to-date data. The tables are
designed to provide a summary of data relating to Federal fiscal
operations reported 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 U.S. Government. Data used in the
preparation of tables FFO-1, FFO-2, and FFO-3 is derived from the
IVIonthly Treasury Statement of Receipts and Outlays of the United
States Government.
Budget authority usually takes the form of 'appropriations'
which permit obligations to be incurred and payments to be made.
Most appropriations for current operations are made available for
obligation only during a specified fiscal year (annual appropriations).

Some

are for a specified longer period (multiple-year appropriations).
Others, including most of those for construction, some for research,
and many for trust funds, are made available for obligation until the

amount appropriated has been expended or
been attained (no-year appropriations).

until

the objectives have

Budget authority can be made available by Congress for
and disbursement during a fiscal year from a succeeding
appropriations (advance funding). For many education
programs. Congress provides forward funding-budget authority
made available for obligation in one fiscal year for the financing of
ongoing grant programs during the succeeding fiscal year. When
advantageous to the Federal Government, an appropriation is
provided by Congress that will become available 1 year or more
beyond the fiscal year for which the appropriation act is passed
(advance appropriations). Included as advance appropriations are
appropriations related to multiyear budget requests.
obligations

year's

flece/pfs.-Receipts reported

in

the tables are classified into the

following major categories: (1) budget receipts and (2) offsetting
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

and deposits

licenses,

Refunds

by the Federal Reserve System.
as deductions from gross receipts.

of earnings

of receipts are treated

Offsetting collections are from other

They are

classified

collections

into

two

major

authority is made available by Congress for a
any part not obligated during that period
and cannot be used later. Congressional actions that extend
the availability of unobligated amounts that have expired or would
otherwise expire are known as reappropriations. The amounts
involved are counted as new budget authority in the fiscal year of the

categories:

(1)

offsetting

credited to appropriations or fund accounts, and (2)
(i.e., amounts deposited in receipt accounts).

receipts

offsetting

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 appropria-

and

types of revolving funds (public enterprise,
intragovernmental, and trust); collections are netted against
spending, and outlays are reported as the net amount.
tions

(2) in the three

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 funds-these are payments into receipt accounts
from governmental appropriation or fund 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
authority and outlays are excluded from the budget

whose budget
totals.

Intrabudgetary

transactions

are

categories: (1) interfund transactions,

When budget

Government accounts or

the public that are of a business-type or market-oriented nature.

subdivided

into

three

where the payments are from

one fund group

(either Federal funds or trust funds) to a receipt
the other fund group; (2) Federal intrafund transactions,

specific period of time,

account

expires

where the payments and receipts both occur within the Federal fund
group; and (3) trust intrafund transactions, where the payments and

legislation in
of

when

the

which the reappropriation action

amounts were

is

included, regardless
when they

originally appropriated or

would otherwise lapse.
Ouf/ays.-Obligations generally are liquidated by the issuance of
checks or the disbursement of cash; such payments are called
outlays. In lieu of issuing checks, obligations also may be liquidated
(and outlays recorded) by the accrual of interest on public issues of
Treasury debt securities (including an increase in the redemption
value of bonds outstanding); or by the issuance of bonds, debentures, notes, monetary credits, or electronic payments. Refunds of
collections generally are treated as reductions of collections, rather
than as outlays. However, payments tor earned-income tax credits in
excess of tax liabilities are treated as outlays rather than as a
reduction in receipts. Outlays during a fiscal year may be for
payment of obligations incurred in prior years or in the same year.
Outlays, therefore, flow in part from unexpended balances of prior
year budget authority and in part from budget authority provided for

which the money is spent. Total outlays include both
budget and off-budget outlays and are stated net of offsetting
the year in

in

receipts both occur within the trust fund group.

deducted from budget authority
There are four
types of receipts, however, that are deducted from budget totals as
agencies'
offsetting
receipts.
They
are:
payments
undistributed
(1)
(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 deposit funds when such money is transferred into the
Offsetting receipts are generally

and outlays by

function, by subfunction, or by agency.

budget).

Off-budget Federal

entities. -The

Federal Government has used

the unified budget concept as the foundation for its budgetary
analysis and presentation since 1969. This concept calls for the
to include all of the Government's fiscal transactions with the
however, various laws have been enacted
under which several Federal entities have been removed from the
budget or weated outside the budget. Other laws have moved

budget

public. Starting in 1971,

certain off-budget Federal entities onto the budget. Under current
law, the off-budget Federal entities consist of the two social security

16

FEDERAL FISCAL OPERATIONS
trust funds,

Federal old-age and survivors insurance and Federal

and net miscellaneous

receipts by source.

disability insurance.

The off-budget Federal

entities

controlled, but their transactions are

under provisions of law.

When an

are

federally

owned and

excluded from the budget
entity is off-budget,

its

Table FFO-3.--On-budget and Off-budget Outlays by Agency

totals

Congress

receipts,

[usually]

provides

budget

authority

the form of appropriations, then

which

is

and surplus or deficit are not included in budget receipts,
budget outlays, or the budget deficit; its budget authority is not
included in the totals of budget authority for the budget; and its

[generally]

receipts, outlays, and surplus or deficit ordinarily are not subject to
the targets set by the congressional budget resolution.

agency.

Nevertheless, the Balanced Budget and Emergency Deficit
Control Act of 1985 (commonly known as the Gramm-RudmanHollings Act) included the off-budget surplus or deficit in calculating
the deficit targets under that act and in calculating the excess deficit
for purposes of that act. Partly because of this reason, attention has
focused on the total receipts, outlays, and deficit of the Federal

Table FFO-4.--Summary of Internal Revenue Collections by States and

outlays,

Government instead

of the on-budget

This

table

summarizes the amount

of

total

receipts,

outlays, total surplus or deficit, transactions in Federal securities

and transactions and balances

Federal agencies

Government funds to make outlays. The amounts in this
represent a breakdown of on-budget and off-budget outlays by

table

Other Areas
This annual table provides data on internal revenue collections
and other areas and by type of tax. The amounts
reported are for collections made in a fiscal year beginning in

classified by States

October and ending the following September.

amounts alone.

Table FFO-l.--Summary of Fiscal Operations

monetary assets,

in

obligate the

in

total

and

Treasury

Fiscal year collections span several tax liability years because
they consist of prepayments (e.g., estimated tax payments and taxes
withheld by employers for individual income and social security
taxes), of payments made with tax returns, and of subsequent
payments made after tax returns are due or are filed (e.g., payments
with delinquent returns or on delinquent accounts).

operating cash.
It

is

also important to note that these data do not necessarily

Federal tax burden of individual States. The amounts are
reported based on the primary filing address furnished by each
taxpayer or reporting entity. For multistate corporations, this address
may reflect only the State where such a corporation reported its
reflect the

Table FFO-2.--On-budget and Off-budget Receipts by Source

Budget receipts are taxes and other collections from the public
from the exercise of the Government's sovereign or
governmental powers. The amounts in this table represent income
that result

taxes, social insurance taxes, net contnbutions for other insurance
and retirement, excise taxes, estate and gift taxes, customs duties.

taxes from a principal office rather than other States where income
or where individual income and social security taxes
were withheld. In addition, an individual may reside in one State and
work in another State.

was earned

.

17

FEDERAL FISCAL OPERATIONS
Budget Results for the Fourth Quarter, Fiscal 1988

Summary
The Federal budget for the
was in deficit by about $35-3/4
a deficit of not quite $29 billion

fourth quarter of fiscal
billion,

1988

somewhat wider than

in the comparable quarter of
the preceding year. For the entire 1988 fiscal year, the deficit
was $155 billion, a rise of slightly more than 3-1/2 percent

from a
In
billion,

about $149-1/2

deficit of

the prior fiscal year.

the fourth quarter of fiscal 1988, receipts totaled $228
up 5 percent from the corresponding months of fiscal

1987. Outlays were $263-3/4
year earlier.
In

billion in

terms

of outlays

billion,

by functional category, spending
in

Total on-budget

t)efore

Spending for national defense was up
about 3 percent for the full fiscal year.

and off-budget reaults:
$227,972

$908,953

On-budget receipts

167.581

667.462

Oti-budget receipts

60.391

241.491

263.783

1.064,055

On-budget outlays

211.645

861,364

Off-budget outlays

52.139

202,691

-35,812

-155,102

(-)...

-44,064

-193.901

(-)...

•8,252

+38.800

41.700

166,171

-4.794

-7,963

-1,095

-3.106

Total receipts

Total outlays

Total surplus (•) or deficit

On-budget surplus

(-)

(+) or deficit

Off-budget surplus (+) or

Meana

affairs

for

the final quar-

and was up about 3
percent for the full fiscal year. Both these changes were affected by the shift of a military pay period from late in fiscal
1987 into fiscal 1988. Spending for the commerce and housing credit functions (including Federal Savings and Loan
1988 from the year

on functions related to agriculture and international
declined in fiscal 1988 from the preceding year.

up 7-1/4 percent from a

national defense rose by about 1/2 percent
ter of fiscal

Insurance Corporation and Federal Deposit Insurance Corin the fourth quarter of this fiscal year and for the
full fiscal year was up sharply from year earlier expenditures.
Interest payments on the debt in the fourth quarter were up
about 10-1/2 percent from the year earlier and were up by
9-1/2 percent for the whole fiscal year. In most other functional categories, spending grew more modestly. Spending
poration)

deficit

of financing:

Borrowing from the public
Reduction

of operating

cash, Increase

(-).

Other means
Total on-budget

and

off -budget

financing

Third-Quarter Receipts

The following capsule analysis of budget receipts, by source, for the third quarter of fiscal 1988 supplements
data earlier reported in the summer issue of the Treasury Bulletin. At the time of that Issue's release, not
enough data was available to analyze adequately collections for the quarter.
fiscal

Individual

income taxes.-lndividual income tax receipts
through June of 1988 were $4.3 billion

somewhat by the
1986.

Tax Reand other factors is

first-year structural effects of the

The

net effect of these

for the period April

form Act

the prior year comparable period. Withheld
were up $5.7 billion, nonwithheld receipts were
down $9.9 billion, and refunds were up $0.1 billion. The drop
in nonwithheld tax receipts reflects two factors-1986 nonwithheld receipts were unusually high with large payments of
liabilities on capital gains, and 1987 payments are reduced

a decrease in receipts between the 2 years, despite underlying growth in personal income.

lower

than

receipts

of

Corporate income taxes.-Net corporate receipts

for the

higher than a
year earlier. Estimated payments were up more than $6.5

third

quarter totaled $31 .99

billion,

$7.98

billion

18

FEDERAL FISCAL OPERATIONS
compared

due to the previous
payments
September 1987). Final payments for the prior year's liability in the quarter were
down approximately $0.9 billion, but this decrease was more
than offset by a $1 .74 billion decrease in refunds.
billion,

with a year earlier,

tributions

(which deferred

many payments

and $0,003

billion

is

due

to

an increase

in

other

retirement contributions.

year's safe-harbor rules for corporate estimated
until

Excise taxes.-Excise tax collections
quarter were $8.96

same

billion

compared

for the April-June

with $8.22 billion for the

quarter of fiscal 1987. Acceleration of collections due

change in the point of collection of fuel taxes is the
primary factor responsible for the increase in collections from
the year earlier period.

to the

Employment taxes and contrlbutions.--Employment
taxes and contributions increased from $76.82 billion in the
third quarter of fiscal 1 987 to $86.61 billion in the same quarter of fiscal 1988. This sizable growth largely reflected the
increase in the old-age and survivors and disability insurance
tax rates, effective in January 1988.

Unemployment Insurance.—Unemployment
tax receipts for the April-June quarter

compared

Estate and gift taxes.-Estate and gift tax receipts were
$2.14 billion in the third quarter of fiscal 1988. This represents an increase of 5 percent over receipts in the same
quarter a year earlier. The slow growth in receipts can be
attributed to several tax law changes as well as the lackluster stock market performance in the fall of 1987.

insurance

were $10.90

billion

with $10.78 billion for the year earlier period.

The

Customs dutles.--Customs

increase of $0.12 billion was the result of offsetting
factors, as the increase in covered wages was nearly balanced by a reduction in average State unemployment insurslight

ance tax

$3.9

billion for

crease

duties, net of refunds, were
the third quarter of fiscal 1988. This is an in-

of $0.2 billion

over the

same

quarter a year earlier.

rates.

Miscellaneous receipts.-Net miscellaneous receipts for
the third quarter of fiscal 1988 fell by $0.2 billion from the
same quarter a year earlier, to $5.1 billion. Deposits of Federal Reserve earnings were up by $0.2 billion, while net
other miscellaneous receipts decreased by $0.4 billion.

Contributions for other insurance and retirement.Retirement contributions for the third quarter of fiscal 1988
increased $0.01 billion compared with the third quarter of
fiscal 1987, reaching $1.2 billion. Of this increase, $0,007
billion is from increased Federal employees retirement con-

Thjrd-Ouarter Hscal 1988

^4et

[In billions

Individual

Income taxes

Budge! Receipts, by Source
of dollars]

53.33

Corporate income taxes

12.03

Empioyment taxes and contributions
Unemployment insurance
Contributions (or other Insurance and ratlrament

34.46

Excise taxes
Estate and

Customs

gift

2.48
.42

2.77
taxes

duties

Miscellaneous receipts

Total budget receipts

.75

1.20
1.89

109.33

17.96

19

FEDERAL FISCAL OPERATIONS
Table FFO-1 .-Summary of Fiscal Operations
[In

mHllons of dollars. Source: Monlhly Treasury Slalement ol
Receipts and OullavB of the United Slates Governmenil

Total on-budgel and off-budgel results

Total
receipts

On-budget

Ofl-budget

receipts

receipts

Total
outlays

On-budget
outlays

Off-budget
outlays

Total
surplus

On-budget
surplus

Off -budget
surplus

defldt

deficit

deficit

(-)

(-)

(-)

Borrowing from the
public-Federal
securities

Public

debt
securities

1984
1985
1986
1987
1988

666.457
734.057
769.091
854.143
908.953

500.382
547.886
568.862
640,741
667.462

200,228
213,402
241,491

1989 (Est.)....

974.045

711.958

262,087

1987

92,410
62.354
56,987
85,525
81.791
60.355
65.730
109.323

73.755
45.992
40,630
67,645
60,645
40,610
44,958
81,993

18,656
16,362
16,357
17,880

59.711
'99.205

,39,764
'77,643

40,980
51,015
75,586

22,217

667,462

241,491

Sept ...
Oct ...
.

Nov
Dec
1988 -Jan

Feb
Mar
Apr

...

.

l^ay....

June

.

.

.

Sept

.

.

.

60.690
69.479
97.803

1988

.

..

908.953

July

Aug

Fiscal

21,146
19,745
20,772
27,330
19,947
21,562
19,710
18,464

851.781
946,323
989,788

165,813
176,807
183,498
193,832
202,691

-185,324
-212,266
•220,698
-148,005
•155,102

221,629

9,363

1,002,147
1,064,055

685,968
769,515
806,291
808,315
861,364

-237,428
•167,575
•193,901

16,731

19,570
38,800

1,096,740

122,695

-173,919

51.224

15,270

13.257

885,877

210,863

77,140

60,497

'93,164

,76,979

16,643
16,185
16,770
31,896
-787
17,763
18,020
15,925
17,607
17,184
16.816
17.805
17,518

,84,009
t09,889
[65,895
84,382
'95,013
[95,554
;82,295
'90,071

83,634
92,561
87,588

67.239
77.993
'66,682
'66.629
'76.994
'79.629

64.688
'72.888

66.818
74.756
70,071

861,364

'•»,810
!-27,022
'-24,363

5,894
-24,027

,'l

'-29,283
,'l3,769
'•22,583
'9,134

-22,944
•23,082
10,214

•155,102

•185,586

262

20

FEDERAL FISCAL OPERATIONS

MONTHLY RECEIPTS AND OUTLAYS
FISCAL YEARS 1987 AND 1988
Source: Monthly Treasury Statement of Receipts and Outlays
of the United States

130

t

120

110

100

90

80

70

60

50

40

Government

21

FEDERAL FISCAL OPERATIONS
Table FF0-2.--0n-budget and Off-budget Receipts by Source
[In

millions of dollars. Source: Monlhly Treasury

Income

Statement o( Receipts and Outlays

ol

Ihe United Stales Govarnment]

tajtes

Corporation

EnTployment taxes and contributions

Refunds
Old-age, dteability. and
hospital insurance

1984
1985
1986
1987
1988

1989

281,805
302,554
314,803
322.463
341.435
(Est.)

1987 -Sept
Oct

Sepi

1988

341.435

Nov
Dec
1988 -Jan

Feb
Mar
Apr

May
Jurte
July

Aug

Fiscal

n.a.

24,569
30.122
24.888
34.020
24.979
28.046
33.296
24,913
27.071
30.995
25.567
30.330
27.209

81.381

..

22

FEDERAL FISCAL OPERATIONS
Table FF0-2.--0n-budget and Off-budget Receipts by Source-Continued
Social Insurance
taxes and

contributions"

Airport

and ainway

trust

fund

Net
social

insurance
taxes and
contri-

butions

1984
1985
1986
1987
1988
1989

(Est.).

1987 -Sept
Oct

,

.

Nov
Dec.
1988 -Jan

.

,

.

.

.

.

Apr
May..
June
.

.

July..

Aug.
Sept.

1988

2,501

335.031

n.a.

.

2,856
2,743
3,066
3,195

25.403
22.177
23.756
23,361

Feb..
Mar..

Fiscal

239.376
265,163
283.901
303.319
334.335

28,162
28,500
25,676
37,357
33,396
27,967
26,915
28,373
28,694

334,335

230
252
265

279
236
246
279
368

2

2.499

Highway

trust

fund

I

23

FEDERAL FISCAL OPERATIONS

BUDGET RECEIPTS BY SOURCE
FISCAL YEARS 1987 AND 1988
Source: Monthly Treasury Statement of Receipts
and Outlays
of the United States Government

440

400

360

-

320

i9

PI
eS

280

1987
1988

240

200

160 -

120

80

:

1

40

Individual

Income

Corp. Income

I
Social Insurance

Excise

Estate and Gift

Customs Duties

TAXES AND OTHER RECEIPTS

Misc. Receipts

.

24

FEDERAL FISCAL OPERATIONS
Table FF0-3.--0n-budget and Off-budget Outlays by Agency
[In

millions of dollars. Source:

Monthly Treasury Statement

Executive

Funds ap-

Agricul-

lative

|udi-

Office

ciary

of the

propriated
to the
President

ture

branch

1.579
1.610
1,665
1,812
1.852

1989 (Est.).

Receipts and Oullays of the United Stales Government]

The

President

1984
1985
1986
1987
1988

of

Legis-

12.050
11.377
10.626
7.252

1.069
1,178
1,337

1,942

De-

panment

46,907

2,489

277.275

22.284

18,970

21,470
25,274
20,660

23,856
23,764
21,036

1,743
1,829
1,814
1,797
1,813
1,806
1,818
1,823
1,853
1,837
1,867
1,877
1,913

1,313
1,386
2,060
1,420
1,612
1,946
1,545
1.308
1.304
1,424
1,012
1,618
1,611

712
978
813

281,940

22,047

18,246

11,161

182
322
1,051

.

687
654

.

.

709
832

.

Sept.

213
165
202

44,003

Fiscal 1988.

Health and Human
Services Department

Except
Social
Security

Social
Security
(off-budget)

Housing and
Urban Development
Department

Interior

Department

Justice
Depart-

Labor
Depart-

Stale
Depart-

ment

ment

ment

19.540

121.082
132.103

1989

143.251
148.893
158.992
(Est.)

1987-Sept

Sept

1988

158.992

Nov
Dec
1988-Jan
Feb
Mar
Apr
l\^ay

June
July

Aug

Fiscal

160.573
11.795
14,008
11,389
12,337
12,775
12,859
14,084
15,715
11,894
13.672
12,039
13.921
14.298

Oct

171.167

10,991

10,587
11,025

18,246

Treasury Department

Transpor-

941
1,126

815
993
836
1.018
1,037

Environ-

mental

tation

Depart-

Inter-

ment

est

on the
public
debt

1984
1985
1986
1987
1988

15,511
16,682
17,673
16,800

18.831

'28,358
'19,205
'23,067
'26,756
'26,102
'20,273
'24,589

643

1,127
621
-1,548

.

Aug

1,894

4,368
4,449
3,642
2,552
2,300
2,220
2,764

1,362

Apr.
I^ay
June.
July

Energy
I3epanment

20.480
20.659
22.047

733

.

Department

220,840
245,371
265,636
274,007
281,940

7,645
5,194
3,806
4,428

I^ar

Education

ment

2,140
2,084
2,156
2.279

Oct..
.

Defense Department

Depart-

42,015
55,523
58,666
49,593
44,003

1987 -Sept.

Nov
Dec
1988-Jan
Feb

Commerce

General
revenue
sharing

Protection

Agency

25

FEDERAL FISCAL OPERATIONS
Table FF0-3.--0n-budget and Off-budget Outlays by Agency-Continued
[In

millions ot dollare]

..

26

FEDERAL OBLIGATIONS

"Obligations" are the basis on which the use of funds is
in the Federal Government. They are recorded at the point
which
the Government makes a firm commitment to acquire goods
at
or services and are the first of the four key events-order, delivery,
payment, and consumption-which characterize the acquisition and
use of resources. In general, they consist of orders placed, contracts
awarded, services received, and similar transactions requiring the
disbursement of money.

order, but the order itself usually

controlled

private

causes immediate pressure on the

economy.

Obligations are classified according to a uniform set of
categories based upon the nature of the transaction without regard to
its
ultimate purpose. All payments for salaries and wages, for

example, are reported as personnel compensation, whether the
personal services are used

in

current operations or

in

the construc-

tion of capital items.

The
point

in

national

Government transactions

obligational stage of

gauging the impact

economy, since

it

of

a strategic
the Government's operations on the
is

Federal agencies often do business with one another; in doing
so, the "buying" agency records obligations, and the "performing"
agency records reimbursements. In table FO-1, obligations incurred
within the Government are distinguished from those incurred outside
the Government. Table FO-2 shows only those incurred outside.

frequently represents for business firms

the Government commitment which stimulates business investment,
including inventory purchases and employment of labor. Disbursements may not occur for months after the Government places its

Table FO-1 .--Gross Obligations Incurred Within and Outside the Federal Government
by Object Class, as of June 30, 1988
[In

millions ol dollars. Source:

Standard Form 225. Repon on Obligations, trom agencies]

Gross obligations incurred

PereonBl services and benefits:
Personnel compensation
Personnel benefits
Benefits lor former personnel

103,134
6,589

103,134
24,160

1,151

1,151

Contractual services and supplies:
Travel and transportation of persons
Transportation of things
Rent, communications, and utilities
Printing and reproduction
Other services
Supplies and materials

479
995

3,838
5.086
8,578

4.051

230

940

100,297
48,918

30.707
17.796

.

.

4,317
6.0S1
12,629
1,170
131,004
66,714

Acquisition of capital assets:

57,837
11.625
29,276

62.125
13,422
29.277

119,184
293,094
144,524

140,534
293,201
185.351

Equipment
Lands and structures
Investments and loans

Grants and fixed charges:
Grants, subsidies, and contributions
Insurance claims and indemnities
Interest and dividends
.

.

.

Refunds
Other:

Unvouchered
Undistributed U.S. obligations

Gross obligations incurred

'

*

Less than $500,000.
For Federal budget presentation a concept of "net cbiigations incurred" is generally used.
This concept eliminates transactions writhin the Government and revenue and reirribursements from the public which by statute may be used by Government agencies without
appropriation action by the Congress. Summary figures on this basis follow. (Data are on
the basis of Reports on Obligations presentatbn and therefore may differ somewhat from
the Budget of the U.S. Government.)

Gross obligations Incurred (as above)
Deduct:

Advances, reimbursements, other income,
Offsetting receipts

Net obligations Incurred

etc.

27

FEDERAL OBLIGATIONS
Table FO-2.-Gross Obligations Incurred Outside the Federal Government by
Department or Agency, as of June 30, 1988
Pn millions

ol dollare.

Source: Standard Form 225, Repofl on Obllgallons, Ifom aflencles]

Personal services and benellls

Personnel

compensation

LagislUlv* branch '
Thejudlctary
Executive Office of the President
Funds appropriated to the President:
international development assistance

former
personnel

Contractual sen/ices and supplies
Travel and

Transpor-

transportation

tation of

of

persons

2S4
192
9

44

Other
Agriculture Department:
Commodity Credit Coiporatbn

Other

2,016

Commerce Department

652

-

Defense Depanment:
Military:

Department of the Army
Oeiuutment of the Navy
Department of the Air Force
Defense agencies

26,558
19,030
14,936
2,148
62,672

Total mllllafy

576

evil

Education

Oepanmem

127

482

Energy Department
Health and
Security

Human

Services, except Social

2,809

Heath and Human Services,
Security (off-budget)

Sodal

Houslngand Urban Development Department..
IntarlorDepartmem
Justice Department

Labor Department
Stale Depanment
Tranipoitatlon Depanment

.

.

321
1.252
1,045

477
484
2.615

Treasury Department:
Interest
interest

on the public debt
on refunds, etc

General revenue sharing
Other
Environmental Protection Agency
General Sen/ices Admlnlslralion
Natbnal Aeronautics and Space
Administration
Office of Personnel

Management

Small Business Adminislralion
Veterans Administration
Other independent agencies:
Postal Senrlce

Tennessee Valley Authority

2,775

403
572
698
106
119
4,621

16,054
871

Other

858

Total

103.134

1.085

ttilngs

Printing

Other

Sup-

and

servk:e8

plies

repro-

duct ion

28

FEDERAL OBLIGATIONS
Table FO-2.-Gross Obligations Incurred Outside the Federal Government by
Department or Agency, as of June 30, l988"Contlnued
[In

millions of dollars]

Grants and fixed charges
Acquisition of
capital assets

Equip-

ment

Lands
and

nnents

struc-

and

tures

loans

invest-

Grants.

29

FEDERAL OBLIGATIONS

GROSS FEDERAL OBLIGATIONS AS OF JUNE

Personal Services & Benefits

Contractual Services

& Supplies

Acquisition of Capital Assets

Grants & Fixed Charges

30,

1988

a

3

Outside Government

X»«X»5$$$$$«»«»

~]

{

Within

Government

WAWVWWl
»M<iSiSiSS»l<»l<i
$«XXXXXXXXXXXXXXXXXXXX^$$$$$$^^^

I

I

I

I

!

I

I

I

I

I

I

I

I

I

I

I

I

200

400

I

I

$ Billions

GROSS FEDERAL OBLIGATIONS INCURRED
OUTSIDE THE FEDERAL GOVERNMENT
As

of

June 30, 1988
Contractual Services

and Supplies

Acquisition of Capital Asset;

ersonal Services and Benefits

Grants and Fixed Cfiarge

I

I

I

I

600

30

ACCOUNT OF THE

U.S.

TREASURY

SOURCE AND AVAILABILITY OF THE BALANCE IN THE ACCOUNT OF THE

The operating cash of the Treasury is maintained in Treasury's
accounts with the Federal Reserve banks and branches and in tax
and loan accounts. Major information sources include the Daily
Balance Wire received from the Federal Reserve banks and
branches, and electronic transfers through the Treasury Financial
Communications System. As the balances in the accounts at the
Federal Reserve banks become depleted, they are restored by
calling in (withdrawing) funds from thousands of financial institutions
throughout the country authorized to maintain tax and loan accounts.

Law

95-1 47, the Treasury implemented
2, 1978, to invest a portion of its operating cash
maintaining
tax and loan accounts.
depositaries
in obligations of
Under the Treasury tax and loan investment program, depositary

Under authority
a program on Nov.

of Public

financial institutions select the

manner

in

which they

will

participate

the program. Depositaries that wish to retain funds deposited in
and loan accounts in interest-bearing obligations participate
under the Note Option; depositaries that wish to remit the funds to
in

their tax

the Treasury's account at Federal Reserve banks participate under
the Remittance Option.

Table UST-1. -Elements of Changes
[In

In

U.S.

TREASURY

Deposits to tax and loan accounts occur in the normal course of
business under a uniform procedure applicable to all financial

whereby customers of financial institutions deposit with
payments and funds for the purchase of Government
securities. In most cases the transaction involves merely the transfer
of funds from a customer's account to the tax and loan account in the
institutions

them

tax

same

financial institution.

On

occasion, to the extent authorized by

the Treasury, financial institutions are permitted to deposit in these
accounts proceeds from subscriptions to public debt securities

entered for their
customers.

own account as

well as for the accounts of their

The tax and loan system permits the Treasury to collect funds
through financial institutions and to leave the funds in Note Option
depositaries and in the financial communities in which they arise until
such time as the Treasury needs the funds for its operations. In this
way the Treasury is able to neutralize the effect of its fluctuating
operations on Note Option financial institution reserves and the
economy.

Federal Reserve and Tax and Loan Note Account Balances

millions of dollars. Source: Financial

Management

Service)

.

31

ACCOUNT OF THE
Table UST-1 .--Elements of Changes

in

of

TREASURY

Federal Reserve and Tax and Loan Note Account Balances-Con.
[In

End

U.S.

millions of dollars]

period

During period

Tax and

High

Average

loan note

accounts

1984
1985
1986
1987
1988
1987 -Sept.
Oct.

Nov
Dec

.

.

1988 -Jan..
Feb..
Mar..
Apr..

May.
June.
July

.

Aug..
Sept.

*
^

21.913
12.886
23.870
27.316
31.375

16,778
19,877
19,087
29,688

9.120
8.898
3.594
5.313
10.276
2.472
2.403
16.186
2.871
9.762
3.910
4.390
13.023

27.316
29.416
17.556
17.056
29.648
26.450
20,510

25,657
14.324
8,898
9,036
10,937
6,338
3.747
16.186
16.186
9,762
4.290
4.397

X.003
16.095
29,842
19.998
8.564
31.375

Government account

series,

Tax and

loan note

loan note

accounts

accounts

32,188
31,978
21,166
13,647
31,582

of securities

and taxes.
letters

of

credit.

purchase price of U.S. Government securities purchased by them for their own account, or
for the account of their customers who enter subscriptions through them, when this method
of payment is permitted under the terms of the drcuiars inviting subscriptions to the issues.
* IndudeG U.S. savings bonds, savings notes, retirement plan and tax
and loss bonds.
savings notes

first

offered for sale as of

May

1,

2,329
2,108
2,107
2,747
851
2,472
1.442
1.396
2.324

X,003

redemptions of securities other than Government account series, etc.
^ Special depositaries are permitted to mai^e payment in the form of a deposit aedil for the

U.S.

31J

28,553
29.416
29.416
28.233
29,907
28,573
26,062

19.101

Represents checks paid, wire transfer paynnents. drawdowns on

202

22,259
22.398
25.139
28.553
32.188

19,101

Less than $500,000.
Represents transfers from tax and loan note accounts, proceeds from sales

other than
'

8.514
4.174
7.514
9.120
13.023

Tax and

1967. and were discontinued after

'2.309

2.847
1.590
1.960

10.841
17.342
17.556

7.408
6.971
19.807
12.131

2.436
16,095
3.568
10.487

4.266
6.155

Tax and
loan note

accounts

4.638
4.162
4.546
6.584
5.028

11.605
11.649
12.208
18.485
19.718

10,585
8,828
3,755
4,209
5,774
3,710
2,894
5,047
7,276
4,306
3,695
3.153
7.684

20,702
26,346
22,637
18,160
20,382
23,956
19,845
15,236
26,994
16.775
17.671

8.444
20.176

June 30, 1970. Retirennent plan txinds first offered for sale as of Jan. 1.1963; tax and loss
bonds first issued in March 1 968.
* Taxes eligble for credit consist of those deposited by taxpayers in the tax and loan
depositaries, as follows; Withheld income taxes t>eginning March 1948; taxes on enployers
and employees under the Federal Insurance Contributions Act beginning January 1950. and
under the Railroad Retirement Tax Act t)eginning July 1951; a number of excise taxes
beginning July 1953; estimated corporation income taxes beginning April 1967; all
corporation income taxes due on or after Mar. 15. 1968; and FUTA taxes beginning April
1970.

32

FEDERAL DEBT
INTRODUCTION

Treasury securities

(i.e.,

public debt securities) comprise

most

of

does not cover Fedagency borrowing from the Treasury, which is presented in the
Monthly Treasury Statement of Receipts and Outlays of the United
States Government. The Government-sponsored entities, whose
financing to other Federal agencies. This table

the Federal debt, with securities issued by other Federal agencies
accounting for the remainder. In addition to the data on the Federal
debt presented in the tables in this section of the quarterly Treasury

eral

Bulletin, the Treasury publishes detailed data on the public debt
outstanding in the Monthly Statement of the Public Debt of the
United States and on agency securities and the investments of Federal Government accounts in Federal securities in the Monthly
Treasury Statement of Receipts and Outlays of the United States

securities are presented in the memorandum section of table FD-4,
are not agencies of the Federal Government, nor are their securities
presented in table FD-4 guaranteed by the Federal Government.

Government.

Table

FD-5.-Maturity

Distribution

and

Average

Length

of

Marketable Interest-Bearing Public Debt Held by Private Investors

Table FD-l.-Summary of Federal Debt

The Federal debt outstanding is summarized as to holdings of
and agency securities by the public, which includes the
Federal Reserve, and by Federal agencies, largely the social security and other Federal retirement trust funds. Greater detail on holdings of Federal securities by particular classes of investors is presented in the ownership tables, OFS-1 and OFS-2, of the Treasury
public debt

Bulletin.

Table FD-2.--Interest-Bear!ng Public Debt

marketable and nonmarketable Treasury
as to type of security. The difference beand total public debt securities reflects outstanding matured Treasury securities on which interest has ceased
to accrue. The Federal Financing Bank (FFB) is under the superviInterest-bearing

securities are presented

The average maturity of the privately held marketable Treasury
debt has increased gradually since it hit a trough of 2 years, 5
months, in December 1975. In March 1971, the Congress enacted a
limited exception to the 4-1/4-percent interest rate ceiling on Treasury bonds that permitted the Treasury to offer securities maturing in
more than 7 years at current market rates of interest for the first time
since 1965. The exception to the 4-1/4-percent interest rate ceiling
has been expanded since 1971 to authorize the Treasury to continue
to issue long-term securities. The volume of privately held Treasury
marketable securities by maturity class reflects the remaining period
to maturity of Treasury bills, notes, and bonds, and the average
length comprises an average of remaining periods to maturity,
weighted by the amount of each security held by private investors
(i.e.,
excludes the Government accounts and Federal Reserve
banks).

tween interest-bearing

sion of the Treasury,

and FFB

securities

shown

in this

Table FD-6.--Debt Subject to Statutory Limitation

table are held

by a U.S. Government account.

Table FD-3."Government Account Scries

Nonmarketable Treasury securities held by U.S. Government
accounts are summarized as to issues to particular funds within the
Government. Many of the funds invest in par-value special series
nonmarketables at statutorily determined interest rates, while others

The statutory debt ceiling is compared with the outstanding debt
subject to limit. The other debt category includes certain Federal
debt that the Congress has designated by statute to be subject to the
debt ceiling. The changes in non-interest-bearing debt shown in the
last column reflect maturities of Treasury securities on nonbusiness
days, such as weekends and holidays. In that event. Treasury
securities are redeemed on the first business day following a nonbusiness day.

whose

statutes do not prescribe an interest rate formula invest in
market-based special Treasury securities whose terms mirror the
terms of marketable Treasury securities.

Table

FD-4.--Interest-Bearing

Securities

Issued

by

Government

Agencies

in

Federal agency borrowing has been declining in recent years,
because the Federal Financing Bank has been providing

part

Table FD-7.--Treasury Holdings of Securities Issued by Government
Corporations and Other Agencies
Certain Federal agencies are authorized by statute to borrow
from the Treasury, largely to finance direct loan programs. In addition, agencies such as the Bonneville Power Administration are
authorized to borrow from the Treasury to finance capital projects.
The Treasury finances such loans to the Federal agencies with issues of public debt securities.

...

33

FEDERAL DEBT
Table FD-1.--Summaty of Federal Debt
[In

millions o( dollars. Source:

Monthly Treasury Slalemenl

of

Recepts and Outlays

of the

Arrrount oulstandinfl

Endol
fiscal

or

1984
1985
1986
1987
1988
1987 -Sept
Oct ..
Nov..
Dec.
1988- Jan..
Feb..
Mar..
Apr
.

.

May..
June.
July.

Aug..
Sepi

.

United Stales Governmenl]

Securities held by:

Governmenl accounts

The

public

year

month

1.576.748
1,827.470
2,129,522
2,354.286
2.614,581

1.572.267
1.823.103
2.125.304
2.350.277
2.602.183

2.354.286
2.388.693
2.413.452
2,435.233
2,456.341
2.479,681
2,493.195
2.508.342
2.526.492
2.555.086
2.560.795
2.586.091
2.614.581

2.350.277
2,384,800
2,409,572
2,431.715
2.448.271
2.471.858
2.487.551
2.502.100
2.519.781
2,547.656
2.553,947
2.575,800
2.602.183

4.481

4.366
4.217
4.009
12,398

4,009
3,893
3.880
3.518
8.069
7.823
5.643
6,243
6,711

7,430
6,849
10,291
12.398

Public

Public

debt

debt

securi-

securi-

264,159
317,612
383,919
458,172
550,649

263.084
316.545
382.859
457.167
550.448

458,172
465,297
466.452
478.468
489.644
492.827
491.424
506.905
517,495
534,698
534,898
536,824
550.649

457.167
464.303
465,459
477,650
488,847
492,246
490,840
506,449
517,039
534.242
534.442
536.748
550.448

1.075
1.067
1.061

1.005

202
1,005

993
993
817
797
581

583
456
456
456
456

Table FD-2.--lnterest-Bearing Public Debt
[In

millions of dollars. Source:

Monthly Slalemenl

of the Public

Debt

of the

Uniled States]

1,312,589
1,509,857
1 ,745,602
1,896,114
2,063,932

1,309.183
1.506.558
1.742.445
1.893.110
2.051.735

3,406
3,299
3,156
3,004
12,196

1,896,114
1,923,397
1,947,000
1,956.766
1.966.697
1.986.854
2.001.771
2.001.437
2.008.997
2.020,388
2,025,897
2,049,267
2,063,932

1.893.110
1.920.497
1.944.113
1.954,065
1,959,424
1,979,612
1,996,711
1,995,651
2,002,742
2,013,414
2,019,505
2,039,052
2,051,735

3,004
2,900
2,887
2,701

7,272
7,242
5,060
5,787
6,255
6,974
6.393
10.215
12.196

34

FEDERAL DEBT
Table FD-3."Government Account Series
[In

millions of dollars. Source: Monthly

Stalamenl

ot Ihe Public

Debt

of the

United Stales]

35

FEDERAL DEBT
Table FD-4.--lnterest-Bearlng Securities Issued by Government Agencies
millions of dollars.

Source: Monthly Traasury SlalemenI

of

Receipts and Outlays of Ihe United Slates

GovemmenI and

Financial

Managefnenl Service]

36

FEDERAL DEBT
Table FD-5.--Maturity Distribution and Average Length of IVIarl^etable
Interest-Bearing Public Debt Held by Private Investors
[In

End

of

millions ot dollars. Source: Otilce ol

Government Finance and Market Analysis

In

Ihe OHice ol the Secrelary]

37

FEDERAL DEBT

CD
LU

Q
LU
—I
CD

<
ILU

<
LU

XX

o
z
LU
—I

LU

O
<
cc
LU

>
<
>-

38

FEDERAL DEBT

39

FEDERAL DEBT
Table FD-7.--Treasury Holdings of Securities Issued by Government Corporations and Other Agencies
[In

millions ol dollars. Source: Monlhly Treasury

Endot
fiscal

or

1984
1985
1986
1987
1988

year

month

211,833

2X.954
210.468
211.875
193.842

1987- Sept
del

Nov
Dec
1988 -Jan

Feb
Mar
Apr

May
June
July

Aug
Sept

211.875
197,043
200,411
196.599
198,908
189,714
192,131

196,610
191,313
193,607
194,924
195,837
193,842

SlalemenI

d

Receipts and Outlays ot Ihe United States

Govemmenl]

40

TREASURY FINANCING OPERATIONS, JULY-SEPTEMBER
JULY

1988

Tenders were opened on June 30. They totaled $33,233
which $9,036 million was accepted, including $504
million of noncompetitive tenders from the public and $3,015
million of the bills issued to Federal Reserve banks for themselves and as agents for foreign and international monetary
authorities. An additional $177 million was issued to Federal
Reserve banks as agents for foreign and international
monetary authorities for new cash. The average bank dislion.

million, of

Auction of

On

7- Year

Notes

July 5 the Treasury

announced

that

it

would auction

notes to refund $3,382 million of
notes maturing July 15, 1988, and to raise about $3,125
offered were Treasury Notes
The
notes
million of new cash.
of Series G-1995, dated July 15, 1988, due July 15, 1995,
with interest payable on January 15 and July 15 until
maturity. An interest rate of 8-7/8 percent was set after the
determination as to which tenders were accepted on a yield
million of 7-year

$6,500

count rate was 7.04 percent.

AUGUST

auction basis.

August Quarterly Financing

Tenders

for the

July 12, 1988,

notes were received

and totaled $17,934

was accepted

million

at yields

until

million, of

1

p.m.

EDST,

which $6,505

ranging from 8.90 percent,

price 99.872, up to 8.92 percent, price 99.769. Tenders at
the high yield were allotted 80 percent. Noncompetitive

tenders were accepted in full at the average yield, 8.91 percent, price 99.821. These totaled $331 million. Competitive
tenders accepted from private investors totaled $6,174
million.

Auction of 2-Year Notes

On July 20 the Treasury announced that would auction
$8,750 million of 2-year notes to refund $10,403 million of
notes maturing July 31, 1988, and to paydown about $1,650
million. The notes offered were Treasury Notes of Series
AD-1990, dated August 1, 1988, due July 31, 1990, with
interest payable on January 31 and July 31 until maturity. An
interest rate of 8-3/8 percent was set after the determination
as to which tenders were accepted on a yield auction basis.

On August 3 the Treasury announced that would auc$11,000 million of 3-year notes of Series T-1991,
$11,000 million of 10-year notes of Series C-1998, and
$7,000 million of 248-day cash management bills to refund
$14,756 million of Treasury securities maturing August 15
and to raise about $14,250 million of new cash. The Treasury also announced that a 30-year bond would not be offered. This resulted from the continued inaction by Congress
on the Treasury's request to eliminate the $270 billion limitation on bonds with a coupon rate of more than 4-1/4 percent
that could be held by the public.
it

tion

it

Tenders for the notes were received until 1 p.m. EDST,
July 27, and totaled $23,516 million, of which $8,782 million
was accepted at yields ranging from 8.40 percent, price
99.955, up to 8.42 percent, price 99.919. Tenders at the high
yield were allotted 67 percent. Noncompetitive tenders were
accepted in full at the average yield, 8.41 percent, price
99.937. These totaled $1,366 million. Competitive tenders
accepted from private investors totaled $7,41 6 million.
In addition to the $8,782 million of tenders accepted in
the auction process, $605 million was awarded to Federal
Reserve banks as agents for foreign and international
monetary authorities. An additional $1,478 million was ac-

The Treasury also announced that a 30year bond would not be offered.

The notes of Series T-1991 were dated August 15, 1988,
due August 15, 1991, with interest payable on February 15
and August 15 until maturity. An interest rate of 8-3/4 percent
was set after the determination as to which tenders were
accepted on a yield auction basis.
Tenders for the notes were received until 1 p.m. EDST,
August 9, and totaled $32,819 million, of which $11,097 million was accepted at yields ranging from 8.76 percent, price
99.974, up to 8.77 percent, price 99.948. Tenders at the high
yield were allotted 95 percent. Noncompetitive tenders were
accepted in full at the average yield, 8.77 percent, price
99.948. These totaled $1,186 million. Competitive tenders
accepted from private investors totaled $9,91 1 million.

cepted from Government accounts and Federal Reserve

banks

for their

own

account.

In

addition to the $11,097 million of tenders accepted

the auction process, $635 million

52-Week

Bills

On June 24

tenders were invited for approximately
364-day Treasury bills to be dated July 7,
1988, and to mature July 6, 1989. As the 52-week bills
maturing on July 7 were outstanding in the amount of $9,807
million, this issue resulted in a paydown of about $800 mil-

$9,000

million of

was accepted from

in

Federal

Reserve banks as agents for foreign and international
monetary authorities, and $1,630 million was accepted from
Government accounts and Federal Reserve banks for their
own account. The notes of Series C-1998 were dated August
15, 1988, due August 15, 1998, with interest payable on
February 15 and August 15 until maturity. An interest rate of
9-1/4 percent was set after the determination as to which
tenders were accepted on a yield auction basis.

41

TREASURY FINANCING OPERATIONS, JULY-SEPTEMBER
Tenders for the notes were received until 1 p.m. EDST,
August 10, and totaled $20,354 million, of which $11,001
million was accepted at yields ranging from 9.24 percent,
price 1 00.064, up to 9.29 percent, price 99.743. Tenders at
the high yield were allotted 17 percent. Noncompetitive
tenders were accepted in full at the average yield, 9.27 per-

These totaled $495 million. Competitive
tenders accepted from private investors totaled $10,506
cent, price 99.871.

million.

price 99.871.

addition to the $11,001 million of tenders accepted

Reserve banks as agents for foreign and international
monetary authorities, and $863 million was accepted from
Government accounts and Federal Reserve banks for their

own

account.

The notes of Series M-1993 were dated September 1,
1988, due November 15, 1993, with interest payable on May
15 and November 15 until maturity. An interest rate of 9 percent was set after the determination as to which tenders
were accepted on a yield auction basis.
Tenders for the notes were received until 1 p.m. EDST,
August 24, and totaled $21,568 million, of which $7,268 million was accepted at a yield of 9.03 percent, price 99.800, up
to 9.04 percent, price 99.759. Tenders at the high yield were
allotted 82 percent. Noncompetitive tenders were accepted
in full at the average yield, 9.04 percent, price 99.759. These
totaled $600 million. Competitive tenders accepted from private investors totaled $6,668 million.

Noncompetitive tenders were accepted in
full at the average yield, 9.27 percent,

In

1988

in

$325 million was accepted from Government accounts and Federal Reserve banks for their own

the auction process,

In

addition to the $7,268 million of tenders accepted

the auction process,

$180

Reserve banks as agents
monetary authorities.

account.

was awarded

million
for

foreign

and

in

to Federal

international

The notes of Series C-1998 may be held in STRIPS
The minimum par amount required is $800,000.

form.

52-Week

The 248-day cash management bills were dated August
15, 1988, due April 20, 1989. Tenders were opened on
August 11, 1988. They totaled $25,672 million, of which
$7,021 million was accepted. The average bank discount
rate

was

7.73 percent.

Auction of 2- Year and 5- Year 2-Month Notes

On August 17

the Treasury announced that it would auc$8,750 million of 2-year notes of Series AE-1990 and
$7,250 million of 5-year 2-month notes of Series M-1993 to
refund $10,572 million of publicly held 2-year notes maturing
August 31, 1988, and to raise about $5,425 million of new

tion

On

Bills

July 22 tenders were invited for approximately $9,000

364-day Treasury bills to be dated August 4, 1988,
and to mature August 3, 1989. The issue was to refund
$9,574 million of maturing 52-week bills and to paydown
about $575 million. Tenders were opened on July 28. They
totaled $31,516 million, of which $9,021 million was acmillion of

cepted, including $465 million of noncompetitive tenders
from the public and $2,650 million of the bills issued to Federal Reserve banks for themselves and as agents for foreign

and international monetary
million

was

authorities.

An

additional

$245

issued to Federal Reserve banks as agents for

and international monetary authorities for new cash.
The average bank discount rate was 7.40 percent.
foreign

cash.

The notes of Series AE-1990 were dated August 31,
due August 31, 1990, with interest payable on
February 28 and August 31 until maturity. An interest rate of
8-1/8 percent was set after the determination as to which
tenders were accepted on a yield auction basis.

SEPTEMBER

1988,

Auction of 2-Year and 4-Year Notes

On September
Tenders for the notes were received until 1 p.m. EDST,
August 23, and totaled $35,272 million, of which $8,779 million was accepted at a yield of 8.72 percent, price 99.829,
which represented the full range of accepted bids. Competitive tenders for 8.72 percent were allotted 74 percent. Noncompetitive tenders were accepted in full at the average
yield, 8.72 percent, price 99.829. These totaled $1,224 million. Competitive tenders accepted from private investors
totaled $7,555 million.
In addition to the $8,779 million of tenders accepted in
the auction process, $820 million was accepted from Federal

21 the Treasury

announced

that

it

would

auction $8,750 million of 2-year notes of Series AF-1990 and
$7,000 million of 4-year notes of Series P-1992 to refund

$17,473 million of Treasury notes maturing September 30
and to paydown about $1,725 million.

The notes of Series AF-1990 were dated September 30,
1988, due September 30, 1990, with interest payable on
March 31 and September 30 until maturity. An interest rate
of 8-1/2 percent was set after the determination as to which
tenders were accepted on a yield auction basis.
Tenders for the notes were received until 1 p.m. EDST,
September 27, and totaled $32,282 million, of which $8,782

42

TREASURY FINANCING OPERATIONS, JULY-SEPTEMBER
was accepted

million

at yields

ranging from 8.52 percent,

up to 8.53 percent, price 99.946. Tenders at
were allotted 75 percent. Noncompetitive
the high
tenders were accepted in full at the average yield, 8.53 percent, price 99.946. These totaled $1,227 million. Competitive
tenders accepted from private investors totaled $7,555
price 99.964,

yield

million.

In

addition to the $8,782 million of tenders accepted

the auction process,

$740

million

in

was accepted from Federal

Reserve banks as agents for foreign and international
monetary authorities, and $1,146 million was accepted from
Government accounts and Federal Reserve banks for their

own

account.

The notes of Series P-1992 were dated September 30,
1988, due September 30, 1992, with interest payable on
March 31 and September 30 until maturity. An interest rate
of 8-3/4 percent was set after the determination as to which
tenders were accepted on a yield auction basis.
Tenders for the notes were received until 1 p.m. EDST,
September 28 and totaled $22,552 million, of which $7,025

was accepted

million

at yields

ranging from 8.74 percent,

up to 8.77 percent, price 99.934. Tenders at
the high yield were allotted 26 percent. Noncompetitive
tenders were accepted in full at the average yield, 8.76 percent, price 99.967. These totaled $666 million. Competitive
tenders accepted from private investors totaled $6,359
price 100.033,

In

was to refund $9,524 million of maturing 52-week bills and to
paydown about $525 million. Tenders were opened on
August 25. They totaled $32,377 million, of which $9,004
million was accepted, including $463 million of noncompetitenders from the public and $3,000 million of the bills
issued to Federal Reserve banks for themselves and as
agents for foreign and international monetary authorities. An
additional $180 million was issued to Federal Reserve banks

tive

as agents for foreign and international monetary authorities
new cash. The average bank discount rate was 7.72

for

percent.

On September 16 tenders were invited for approximately
$9,000 million of 364-day Treasury bills to be dated September 29, 1988, and to mature September 28, 1989. As the
52-week bills maturing on September 29 were outstanding in
the amount of $9,281 million, this issue resulted in a
paydown of about $275 million. Tenders were opened on
September 22. They totaled $28,1 12 million, of which $9,029
million was accepted, including $423 million of noncompetitive tenders from the public and $2,300 million of the bills
issued to Federal Reserve banks for themselves and as
agents for foreign and international monetary authorities. An
additional $372 million was issued to Federal Reserve banks
as agents for foreign and international monetary authorities
for new cash. The average bank discount rate was 7.48
percent.

Cash Management

million.

addition to the $7,025

the auction process,

$420

tenders accepted in
accepted from Federal

million of

million

was

Bills

On August 24
million of

24, 1988, maturing

own

totaled

raise

new

cepted.

52-Week

Bills

On August
$9,000
tember

19 tenders were invited for approximately
364-day Treasury bills to be dated Sep1988, and to mature August 31, 1989. The issue

million of
1,

tenders were invited for approximately

20-day bills to be issued September 2,
1988, representing an additional amount of bills dated March

$10,000

Reserve banks as agents for foreign and international
monetary authorities, and $500 million was accepted from
Government accounts and Federal Reserve banks for their
account.

1988

September 22, 1988. The issue was to
cash. Tenders were opened on August 30. They

$40,570 million, of which $10,052 million was acThe average bank discount rate was 7.93 percent.

43

PUBLIC DEBT OPERATIONS
INTRODUCTION
Background

The Second

52-week bill is a reopening of the existing 52-week
low, and average yields on accepted tenders and the
Liberty

Bond Act

(31

U SC. 3101,

at seq.) pro-

vides the Secretary of the Treasury with broad authority to borrow
and to determine the terms and conditions of issue, conversion,
maturity,

payment, and interest rate on Treasury

securities.

Data

in

the "Public Debt Operations" section, which have been published In
the Treasury Bulletin In some form since its inception in 1939, per-

marketable Treasury securities, currently bills, notes, and
bonds. Treasury bills are discount securities that mature In 1 year or
less, while Treasury notes and bonds have semiannual interest payments. New Issues of Treasury notes mature In 2 to 10 years, and
bonds mature In over 10 years from the issue date. Each marketable
Treasury security Is listed In the Monthly Statement of the Public
Debt of the United States.
tain only to

Table PDO-l.--Maturity Schedule of Interest-Bearing Marketable
Public Debt Securities Other than Regular Weekly and 52-Week

Treasury
All

Bills

unmatured Treasury notes and bonds are

listed in maturity

A separate breakout Is
provided for the combined holdings of the Government accounts and
Federal Reserve banks, so that the "All other Investors" category
Includes all private holdings

order, beginning with the eariiest maturity

total

bids

Is

Bills

weekly auctions of 13- and 26-week bills and
auctions of 52-week bills every fourth week are presented In table
PDO-2. Treasury bills mature each Thursday. f*Jew issues of 13week bills are reopenlngs of 26-week bills. The 26-week bill Issued
every fourth week to mature on the same Thursday as an existing
results of

high,

presented, along with the dollar value of awards on a

securities. Noncompetitive bids are awarded
accepted competitive bids.

at the

average

yield

on

Table PDO-3.--Public Offerings of Marketable Securities Other than
Regular Weekly Treasury

Bills

The results of auctions of marketable Treasury securities, other
than weekly bills, are listed in the chronological order of the auction
dates over approximately the most recent 2 years. This table includes notes and bonds presented in table PDO-1, 52-week bills in
table PDO-2, and data for cash management bills. Treasury offers
cash management bills from time to time to bridge temporary or
seasonal declines in the cash balance. Cash management bill
maturities generally coincide with the maturities of regular Issues of
Treasury bills.

Table PDO-4.-Allotments by Investor Classes for Public Marketable

A and B

Data on allotments of marketable Treasury securities by invesare presented in chronological order of the auction date for
approximately the most recent 2 years. These data have appeared in
the Treasury Bulletin since 1956. Tenders In each Treasury auction
of marketable securities other than weekly auctions of 13- and 26week bills are tallied by the Federal Reserve banks into investor
classes described in the footnotes to the table.
tor class

The

The

competitive and a noncompetitive basis. The Treasury accepts noncompetitive tenders of up to $1 million in each auction of Treasury
securities in order to assure that individuals and smaller institutions
are able to participate In offerings of new marketable Treasury

Securities, Parts

Table PDO-Z.-OfTerings of

bill

dollar value of

44

PUBLIC DEBT OPERATIONS
Table PDO-1. --Maturity Schedule of Interest-Bearing Marketable Public Debt Securities Other than
Regular Weekly and 52-Week Treasury Bills Outstanding, Sept. 30, 1988

Held by

Date
of final

maturily

U.S.

Govl

45

PUBLIC DEBT OPERATIONS
Table PDO-1 .--Maturity Schedule of Interest-Bearing Marketable Public Debt Securities Other than
Regular Weekly and 52-Week Treasury Bills Outstanding, Sept. 30, 1988-Continued
[In

millions of dollars]

46

PUBLIC DEBT OPERATIONS
Table PD0-2.--0fferings of
(Dollar arrpunts in millions. Source: Monthly

Slalement

of the Public

Debt

Bills
of the

United Slates and allotments]

47

PUBLIC DEBT OPERATIONS
Table PD0-2.-0fferlngs of Bills-Continued
On laal bids accepted
Average

48

PUBLIC DEBT OPERATIONS
Table PD0-3.-Public Offerings of Marketable Securities Other than Regular Weekly Treasury
[Dollar

amounts

In millions.

Source: Bureau

ol Iha Public

Debt]

Bills

49

PUBLIC DEBT OPERATIONS
Table PD0-3.--Publlc Offerings of Marketable Securities Other than Regular Weekly Treasury Bllls--Con.
[Dollar

amounts
Period to

Description ot securities

millions]

final

maturity
(years, months,
2

days)

5/25/B8

In

^

Amount

Range

of

accepted bids
for

notes

and bonds

so

PUBLIC DEBT OPERATIONS
Table PD0-3.-Publlc Offerings of Marketable Securities Other than Regular Weekly Treasury Bills-Con.

^'

Yields accepted ranged Irom

average

at

7.39%

(price

average

at

7.90%

(price

at

8.44%

(price

at

7.64%

(price

at

average

at

" Yields

8.23%

(price

average

9.06%

(price

7.40%

(price 99.954) with the

vtith

the

at 9.

at 8.

1

1

7% (price

at

up to 8.45% (price 99.610) with the

up

(price 99.955) with the

average

8.21%

(price 99.777)

up to 8.24% (price 99.699) with the

average

7.65%

(price

9.16%

(price 99.643)

up to 9.18% (price 99.440) with the

8.15%

(price 99.955)

up

to

8.18%

(price 99.900) with the

8.75%

(price 99.926)

(price 99.632).

8.91%

(price 99.821).

at 8.41

% (price 99.937).

accepted ranged (rom 8.76% (price 99.974) up to 8.77% (price 99.948) with the

at

^ Yields

8.77%

(price 99.948).

accepted ranged Irom 9.24% (price 100.064) up to 9.29% (price 99.743) with the
927% (price 99.871 ).

at

low, high,

^ Yields

and average

yield

was 8.72%

(price 99.829).

accepted ranged Irom 9.03% (price 99.800) up to 9.04%

at

™ Yields

9.04%

(price 99.759) with the

(price 99.759).

accepted ranged Irom 8.52% (price 99.964) up to 8.53% (price 99.946) with the

average

at

average

at

^ Yields

ranged Irom 8.90% (price 99.872) up to 8.92% (price 99.769) with the

8.53%

(price 99.946).

accepted ranged Irom 8.74% (price 100.033) up to 8.77% (price 99.934) with the

8.76%

(price 99.967).

up to 8.77% (price 99.843) with the

99 .843).

Note. -All notes and bonds, except (or (orelgn-targeted issues,

8.04%

(price 99.927)

up to 8.06% (price 99.891) with the

(price 99.666)

up to 8.37% (price 99.599) with the

8.05%

8.36%

accepted ranged Irom 8.40% (price 99.955) up to 8.42% (price 99.919) with the

" Yields

The

99 .909).
Yields accepted ranged Irom 8.35%
at

average

average

99 .542).

Yields accepted ranged Irom

average

at

" Yields

(price 99.991)

8% (price 99 .900).

8.77%

average

(price 99.714)

to

at

^ Yields accepted

7.63%

99 .610).

^' Yields accepted ranged (rom

average

8.43%

99 .725).

Yields accepted ranged trom

average

to

up to 7.92% (price 99.848)

accepted ranged Irom 9.05% (price 99.675) up to 9.06% (price 99.610) with the

^^ Yields accepted ranged Irom

average

up

99 .973).

^^ Yields accepted ranged (rom

average

(price 99.949)

99 .662).

Yields accepted ranged (rom

average

(price 99.991)

7.89%

99 .916).

'^ Yields accepted ranged (rom

average

7.38%

99 .973).

Yields accepted ranged Irom

(price

were

sold at auction

through competitive and noncompetitive bidding. Foreign-targeted issues were sold at
auction through corrpetitive bidding only.

51

PUBLIC DEBT OPERATIONS
Table PDO-4.--Allotments by Investor Classes for Public Marketable Securities
Part A-Other than Bills
[In

millions Of dollars]

Allotments by investor classes

State and bcaJ
Description of securities

Total

Federal

Commer-

arrount
issued

Reserve
banks

banks

dal
^

Insur-

52

PUBLIC DEBT OPERATIONS
Table PDO-4.--Allotments by Investor Classes for Public Marketable Securities-Con.
Part B-Bills Other than Regular Weekly Series
ppllar amounis

in

millions]

53
U.S.

SAVINGS BONDS AND NOTES

Series EE bonds, on sale since Jan. 1, 1980, are the only
savings bonds currently sold. Series HH bonds are issued in
exchange for series E and EE savings bonds and savings notes.
Series AD were sold from Mar. 1, 1935, through Apr. 30, 1941.
Series E was on sale from May 1, 1941, through Dec. 31, 1979
(through June 1980 to payroll savers only). Series F and G were sold

from

May

1,

1941, through Apr. 30, 1952. Series

H was

sold from

June 1, 1952. through Dec. 31, 1979. Series HH bonds were sold for
cash from Jan. 1, 1980, through Oct. 31, 1982. Series J and K were

sold from

May

1,

1952, through Apr. 30, 1957.

U.S. savings notes were on sale May 1, 1967. through June 30,
1970. The notes were eligible for purchase by individuals with the
simultaneous purchase of series E savings bonds. The principal
terms and conditions for purchase and redemption and information
on investment yields of savings notes appear in the Treasury
Bulletins of March 1967 and June 1968; and the Annual Report of
the Secretary of the Treasury for fiscal year 1974.

Table SBN-1 .--Sales and Redemptions by Series, Cumulative through Sept. 30, 1988
[In

millions ot dollars. Source:

Monthly Siaemenl

Sales

'

of the Public

Debt ot the United Slates; Market Analysis Section, United Stales Savings Bonds Divisionl

54
U.S.

SAVINGS BONDS AND NOTES

Table SBN-3.--Sales and Redemptions by Period, Series E, EE, H, and
[In

millions ol dollars. Source:

Monthly Statement

ol the Public

Debt

of the

HH

United Stales; Market Analysis Section. United States Savings Bonds Division]

55

OWNERSHIP OF FEDERAL SECURITIES
INTRODUCTION
Federal securities presented in these tables comprise public
debt securities issued by tlie Treasury and debt issued by other
Federal agencies under special financing authorities. See the Federal debt (FD) series of tables for a more complete description of the
Federal debt.

Table OFS-l.--Dlstributlon of Federal Securities by Class of Investors

and Type of Issues
Holdings of Treasury marketable and nonmarketable securities
and of debt issued by other Federal agencies are presented for Government accounts, the Federal Reserve banks, and private investors. Government account holdings largely reflect investment by the
social security and Federal retirement trust funds. The Federal Reserve banks acquire Treasury securities in the market as a means of
executing monetary policy.

Table OFS-2.--Estiniated Ownership of Public Debt Securities by Private Investors
Privately held Treasury securities are those held by investors
tfie Government accounts and Federal Reserve banks.
Treasury obtains information on private holdings from a variety of
sources, such as data gathered by the Federal financial institution
regulatory agencies. State and local holdings and foreign holdings
include special issues of nonmarketable securities to municipal entities and foreign official accounts, as well as municipal and foreign
official and private holdings of marketable Treasury securities. Data
on foreign holdings of marketable Treasury securities are presented
in the capital movements tables in the Treasury Bulletin. See the

other than

footnotes for descriptions of the investor categories,

56

OWNERSHIP OF FEDERAL SECURITIES
Table OFS-1 .--Distribution

off
[In

Federal Securities by Class of Investors and Type of Issues

millions ot dollars.

Source: Financial Management Service]
I

Total

End

of

fiscal

or

year

month

merest-bearing public debt securities

57

OWNERSHIP OF FEDERAL SECURITIES
Table 0FS-2.--Estimated Ownership of Public Debt Securities by Private Investors
[Par values

'

in billions ot dollafs.

Source: Office ot Government Finance and Market Analysis

In

Ihe Office ol the Secretary]

58

MARKET YIELDS
INTRODUCTION
The tables and charts in this section present yields on Treasury
marketable securities and compare long-term Treasury market yields
with yields on long-term corporate and municipal securities.

on Treasury bills, which are discount
coupon equivalent yields of bank discount rates at
which Treasury bills trade in the market. The Board of Governors of
the Federal Reserve System also publishes the Treasury constant
a consistent data

series. Yields

securities, are the

maturity data series in

its

weekly H. 15 press release.

Table MY-1.--Treasury Market Bid Yields at Constant Maturities:
Bills,

Notes,

and Bonds
Table MY-2.--Average Yields of Long-Term Treasury, Corporate, and

presented in the chart that accompanies table MY-1, is based on current market bid quotations on the
securities
as of 3:30 p.m. each busiTreasury
most actively traded
ness day. The Treasury obtains quotations from the Federal Reserve
Bank of New York, which composites quotations provided by five
primary dealers. This yield curve reflects yields based on semiannual
interest payments and is read at constant maturity points to develop

The Treasury

yield curve,

Municipal Bonds

The long-term Treasury rate is the 30-year constant maturity
presented in table MY-1. The corporate and municipal bond
series are developed by the Treasury, using reoffering yields on new
long-term securities rated Aa by Moody's Investors Service. See the
rate

footnotes for further explanation.

59

MARKET YIELDS
Table MY-1. --Treasury Market Bid Yields

at

Constant Maturities:

[Sourca: Office ol Governmenl Finance and Market Analysis
l-yr.

Monthly average

6.33%

7.04%

Nov
Dec

S.87
5.95

1988- Jan

6.x

6.49
6.68
6.56

Feb
Mar

5.84
5.B7
6.0B
6.44
6.66
6.94
7.29
7.47

6.21

Nov
Dec

5.43
5.36
5.86

1988- Jan

5.81

Feb
Mar

5.79
5.87
6.15
6.62
6.76
7.17
7.54
7.48

6.26
6.39
6.47
6.32
6.05
6.32
6.66
7.18
7.04
7.49

1987 -Oct

Apr

May
June
July

Aug
Sep!
ErxJ of

6.17
6.50
6.88
7.04
7.35
7.78
7.82

month

1987 -Oct

Apr

May
June
July

Aug
Sept

7.59%

2yr.

3yr.

in

Bills,

Ihe Office ol the Secretary]
5-yr.

Notes, and Bonds*

60
MARKET YIELDS

o

—

61

MARKET YIELDS
Table MY-2.-Average Yields of Long-Term Treasury, Corporate, and Municipal Bonds
(Source: Office of GovefnmenI Finance and Market Analysis

Treasury

In

the Office ol the Secrelary]

62

MARKET YIELDS

AVERAGE YIELDS OF LONG-TERM TREASURY,
CORPORATE, AND MUNICIPAL BONDS
Monthly Averages

Treasury 30- Yr. Bonds

Aa Municipal Bonds
Aa Corporate Bonds

iiiii|iiiiiiiiiii|iiiiiiiiiii|iiiiiiiiiimiiiiiiiiii|iiiiiiiiiii|iiiiiiiiiii|iiiiiiiiiii|iiiiiiiiiii|iiiiiiiiiii^

78

79

80

81

82

83

84

CALENDAR YEARS

85

86

87

TTTTTT

63

FEDERAL AGENCIES' FINANCIAL REPORTS
INTRODUCTION
Section 114 of the Budget and Accounting Procedures Act of
1950 (31 U.S.C. 3513a) requires the Secretary of the Treasury to
prepare reports on the financial operations of the U.S. Government
and provides that each executive agency must furnish the Secretary
of the Treasury such reports and information relating to the agency's
financial condition and operations as the Secretary may require. The
provisions do not apply to the legislative and judicial branches of the
Federal Government; however, these entities are encouraged to
submit the prescribed reports so the Secretary of the Treasury can
prepare comprehensive reports on all the financial activities of the
U.S. Government.
Financial Manual (I TFM 2-4100) sets the criteria
submission of annual and quarterly financial reports in accorEntities Listing (Bulletin No. 87-07). Reports are provided for six fund types: Revolving funds, trust revolving
funds, 15 major trust funds, all other trust funds, all other activity
combined, and consolidated reports of an organizational unit. The
financial transactions supporting the required reports are to be accounted for on the accrual basis The Report on Operations can be
submitted on a cash basis under certain circumstances (see TFI^
2-4180.20). Reports are to be prepared from a budgeting and accounting system which contains an integrated data base that is part
of the agency's integrated financial management system as required
by the Office of Management and Budget (OMB) Circular No. A-1 27.

The Treasury

for the

dance Wuh the Reporting

conducted in the territories or overseas, and any monetary
assets or property received, spent, or otherwise accounted for by the
reporting entity. Amounts are reported to the dollar.
tions

Requirements provide that Federal agencies submit to Treasury
four financial reports supplemented by three supporting reports
which are consolidated and published annually in the winter issue of
the Treasury Bulletin. These reports are: Report on Financial Position (SF 220), Report on Operations (SF 221), Report on Cash Flow
(SF 222), and Report on Reconciliation (SF 223). The three supporting reports are: Direct and Guaranteed Loans Reported by Agency
and Program Due from the Public (SF 220-8), Report on Accounts
and Loans Receivable Due from the Public (SF 220-9), and Additional Financial Information (SF 220-1). The report on Direct and
Guaranteed Loans is submitted to Treasury quarterly, and annually
for publication in the Treasury Bulletin. The Report on Accounts and
Loans Receivable Due from the Public is submitted quarterly on a
selected basis, and by all entities annually. Information captured in
the SF 220-8 is shown in the following table:

I

The required reports should include all assets,
all programs and activities under

equities relating to

liabilities,

and

control of the

reporting entity, except for the assets of disbursing officers, which

are reported by the Treasury. Reports should include transfer appropriation accounts from other agencies, foreign currencies, opera-

Table FA-l.-Direct and Guaranteed Loans
This report reflects the direct loans and guaranteed loans to the
public through the Federal Credit Program to support credit activities.
Actual control of credit program levels remains with authorizing legislation and appropriations acts. The report on Direct and Guaranteed
Loans also provides the Federal Reserve Board information to
monitor the flow of funds. An accompanying chart depicts direct
loans

and guaranteed loans

for the third quarter of fiscal 1988.

64

FEDERAL AGENCIES' FINANCIAL REPORTS
Table FA-2.
[In

thousands

—

Direct

of dollars.

and Guaranteed Loans, June

I

1988
Guarantees or insurance

Direct loans or credit

Agency and program

30,

Source; SF 220-8; compiled by Financial Management Service]

Amount

Maximum

Amount

Maximum

outstanding

auttiority

outstanding

authority

1,118,309
2,899,933
131,250
273,065
108,438
8,043,269
12,153,414
50,662

1,947,255
7,735,320
350,000
682,663
108,438
8,043,269
12,153,414
67,814

— Wholly owned Government enterprises
U.S. dollar loans

Funds appropriated

to ttie

President

Guaranty reserve fund
Foreign military sales credit

UMary

sales credit to Israel
Emergency security assistance to Israel

Housing and other

credit guaranty

programs

Alliance for Progress loan fund

Other programs

Overseas Private Investment Corporation

Funds appropriated

Total

Department

to the

President

24,778,342

of Agriculture

091,248

Commodity loans
Rural electnfication and telephone revolving fund

136,881

Rural Telephone

Bank
Rural communication development fund

486,003

Agncultural credit insurance loans
Rural development insurance loans

18,837
941,131
129,372
942,061

Rural housing insurance loans
Self help

875

housing development loans

Rural development loans
Home Administration loans

Other Farmers
Total

Department

of Agriculture

,

Department of Commerce:
Economic Development loans
International Trade Administration loans
Coastal energy impact fund
Federal ship financing fund
Other loans
Total

Department

of

Commerce

32,224
4,493

547,790
7,184
87,365
29,285
9,653
51,279

2,026,645

.

65

FEDERAL AGENCIES' FINANCIAL REPORTS
Table FA-2.

—

Direct

and Guaranteed Loans, June
Direct loans or credit

Agency and program

Amount
outstanding

I

— Wholly owned Government enterprises
U.S. dollar loans

Depanmenl
Ryukyu

of

Defense

Islands, construction of

Total

Department

power systems

3,337

.

Defense

of

3,337

Department of Education:
College housing loans
Higher education
Other loans
Total

Department

facilities

Department

of

loan and insurance fund

.

Education

of Energy:

Bonneville

Power Administration loans

Other loans
Total

Department

Department

of Health

of

Energy

and Human Services:

Health professions graduate student loan fund
IVIedical facilities guarantee and loan fund
Student loan program

Other Health Resources and Services Administration loans
Nurse training fund
Health maintenance organization loan fund
Total

Department

of Health

and Human Services

Department of Housing and Urban Development:
Federal Housing Administration fund
Housing for the elderly or handicapped
Low-rent public housing program
Other housing loans
Management and liquidating functions
Guarantees of mortgage-backed securities ....
Rehabilitation loan fund

Urban renewal programs
Community disposal operations fund
Community planning and development loans

..

Nonprofit sponsor assistance
Total

Department

of

Housing and Urban Development

.

30,

1988

—Con.
Guarantees or insurance

66

FEDERAL AGENCIES' FINANCIAL REPORTS
Table FA-2.

—

Direct

and Guaranteed Loans, June

30,

I

Amount

Maximum

Amount

Maximum

outstanding

authority

outstanding

authority

— Wholly owned Government enterprises
U.S. dollar loans

Department of the Interior
Reclamation proiects
Indian affairs revolving fund for loans
Indian loan guaranty

Guam Power

and insurance fund

Authority

Virgin Islands construction

Total

Department

of the Interior

Department of Labor:
Pension Benefit Guaranty Corporation
Total

Department

of

Labor

Department of Slate:
Emergencies in diplomatic and consular service
Loans to the United Nations
Department

Total

Department

of State

of Transportation:

Federal Aviation Administration:

Purchase

of aircraft

Federal Highw/ay Administration:
Right-of-way revolving fund

Highway

trust

funds

Federal Railroad Administration loans
tvlass Transportation loans

Urban

Ivlaritime Administration:

Federal ship financing fund
Total

Department

Department

of Transportation

of the Treasury:

Federal Financing Bank

Loans

to foreign

Total

governments

Department

of the

Treasury

Environmental Protection Agency:

Loans
Total Environmental Protection

Agency

General Services Administration:
Federal buildings fund
Other funds
Total General Services Administration

Small Business Administration:
Business loans
Disaster loan fund
Other loans
Total Small Business Administration

—Con.
Guarantees or insurance

Direct loans or credit

Agency and program

1988

544.496
101.315
31.099

67

FEDERAL AGENCIES' FINANCIAL REPORTS
Table FA-2.

—

Direct

and Guaranteed Loans, June

30,

I

Amount

Maximum

Amount

Maximum

outstanding

authority

outstanding

authority

— Wholly owned Government enterprises
U.S. dollar loans

Veterans Adminislralion
Loan guaranty revolving fund
Direct loan revolving fund
Service-disabled veterans insurance fund
Veterans reopened insurance fund
Vocational rehabilitation revolving fund
Education loan fund
Other trust funds
National service life insurance fund
Veterans special life insurance fund

Compensation and

benefits

Other loans
Total Veterans Administration

.

Other independent agencies:

Loans

DC, Government

to

Export-Import Bank of the United States
Federal Savings and Loan Insurance Corporation
National Credit Union Administration

Tennessee Valley Authority
Total Other independent agencies
Total

II

j

Pan

i

—

Wholly owned Government enterprises
Loans repayable In foreign currencies

Loans repayable

Agency

in

foreign currencies:

for International

Development

United States Information
Total Part

Agency

II

—

Privately owned Governmentsponsored enterprises

III

Privately
,

'

owned Government-sponsored

enterprises:

Student Loan Marketing Association
Federal National Mortgage Association
Banks for cooperatives
Federal intermediate credit banks
Federal land banks
Federal

home

Federal

Home Loan Mortgage

Total Part

Grand

loan banks

III

total, all

parts

Corporation

—Con.
Guarantees or insurance

Direct loans or credit

Agency and program

1988

1,185,767

68

FEDERAL AGENCIES' FINANCIAL REPORTS

DIRECT AND GUARANTEED LOANS, JUNE

30,

Wholly owned Government Enterprises--U.S. Dollar Loans
Agriculture

Direct

Loans
Educatio

Eximbank-

ducation
•Agriculture

Guaranteed Loans

ther

1988

International Statistics

71
INTERNATIONAL FINANCIAL STATISTICS
The tables in this section are designed to provide data
on U.S. reserve assets and liabilities and other statistics
related to the U.S. balance of payments and international

the U.S. balanc

Table IFS-3 shows U.S. Treasury nonmarketabl e bonds and
issued to official institutions and other residents of
s
ign countries.

financial position.
Table IFS-1 shows the reserve assets of the United States,
Including its gold stock, special drawing rights held in the
Special Drawing Account in the International Monetary Fund,
holdings of convertible foreign currencies, and reserve position in the International Monetary Fund.

Table IFS-1.

-

U.S.

Reserve Assets

[In millions of dollars]

72
INTERNATIONAL FINANCIAL STATISTICS
Table IFS-2.

-

Selected U.S. Liabilities to Foreigners
[in millions of dpi lars]

Offi

s t

i

tu t

Liabil ti
to nonmon
tary in-

1/

i

i

i^ne

MarketLiabili- able U.S.
ties
Treasury
reported bonds
by banks and
Total
(2)

in

U.S.
(3)

not
(4)

y

Nonmarketable U.S.
Treasury
bonds and
notes 2/
(5)

Other
readil
market
able
liabil
ties £/
(6)

Liabilities to
banks J^/
(7)

Liabili- Marketties
able U.S.
reported Gov't
by banks bonds
Total
(8)

in

U.S. _2^/^/
(9)

(10

Nonmarket- ternation
able U.S.
al and re
Treasury
gional or
bonds and ganizatio
7/

73

INTERNATIONAL FINANCIAL STATISTICS
These indices are presented to provide measures of the general
exchange value of the dollar that are broader than those
provided by single exchange rate levels. They do not purport to
represent a guide to measuring the impact of exchange rate levels
on U.S. international transactions. The indices are computed as

during 1982-83.

geometric averages of individual currency levels with weights
derived from the share of each country's trade with the United States

the

foreign

These series replace indices previously appearing in
the Treasury Bulletin which calculated the trade-weighted arithmetic
average of percentage changes in exchange rates. The current
series should be more robust than previous ones although for small
smooth changes in exchange rates the two sets of calculations yield

same

information.

Table IFS-4.--Trade- Weighted Index of Foreign Currency Value of the Dollar
[Source: Ottice of Foreign

Exchange Operaltons-lntemattonal

Affalrel

Dale

Index o( industrial
country currencies

Annual average

(1980=100)2
1978
1979
1980

100.0

1981

109.1

1982
1983
1984
1985
1986
1987

119.7
125.2
133.5

End

99.7
98.8

139.2
119.9
107.5

of period

(Dec.

1980= 100)

1978
1979
1980

96.1

98.4

100.0
109.5
1 19.2
127.9
140.8

1981

1982
1983
1984
1985
1 988
1987
1987

127.8
1

Nov
Dec

100.7
97.8
99.8

1988 -Jan

Feb
Mar
Apr

99.7
97.7
97.5

May

98.5
101.4

June
July

102.2
103.5
102.7

Aug
Sept.

Each Index covers (a) 22 currencies of countries represented in the Organization tor
Economic Cooperation and Development (OECD): Australia. Austria. Belgium-Luxembourg,
Canada. Denmark. Finland. France. Germany. Greece. Iceland. Ireland, Italy, Japan, the
Netherlands, New Zealand, NonAfay, Portugal, Spain, Sweden. Switzerland, Turkey, and the
United Kingdom; and (b) currencies ot 4 ma)or trading economies outside the OECD: Hong
'

14.4

97.8

Kong. Korea, Singapore, and Taiwan. Exchange rates are drawn from the International
Monetary Fund's "Internattonal Financial Statistics" when available.
^ Index includes average annual rates as reported

in

'International Financial Statistics.'

,

74

CAPITAL MOVEMENTS
INTRODUCTION

United States, including the branches, agencies, subsidiaries, and
United States of foreign banking and nonbank-

Background

otiier affiliates in the

Data relating

movements between the United States
have been collected in some form since 1935.

to capital

and foreign countries

Reports are filed with district Federal Reserve banks by commercial
banks, other depository institutions, bank holding companies,
securities brokers and dealers, and nonbanking enterprises in the
United States. Statistics on the principal types of data by countiv or
geographical area are then consolidated and are published in tiie
Treasury

Bulletin.

The reporting forms and instructions
International Capital (TIC) Reporting System
number

used

in

the Treasury

have been revised a
meet changing conditions and to increase tiie
the published statistics. The most recent, general

of times to

usefulness of

forms became effective with the banking
and with tiie nonbanking reports as of
and instructions are developed
with the cooperation of other Government agencies and the Federal
Reserve System and in consultations with representatives of banks,
securities firms, and nonbanking enterprises.
revision

of

tiie

report

reports as of April 30, 1978,

December

have reportable liabilities, claims, or securities
below specified exemption levels are exempt from

ing firms. Entities that

ti'ansactions
reporting.

Banks, other depository institutions, and some brokers and
dealers file monthly reports covering their dollar liabilities to, and
dollar claims on, foreigners in a number of countries. Twice a year,

as of June 30 and December 31, they also report the same liabilities
and claims items with respect to foreigners in countries not shown
separately on the monthly reports. Ouarteriy reports are tiled witii
respect to liabilities and claims denominated in foreign currencies
ws-a-Ws foreigners. Effective January 31, 1984, the specified
exemption level applicable to the monthly and quarteriy banking
reports was raised from $10 million to $15 million. There is no
separate exemption level for the semiannual reports.

31, 1978. Revised forms

Banks, other depository institutions, securities brokers and
and other enterprises report monthly their transactions in
long-term securities with foreigners. The applicable exemption level

dealers,

is $500,000 with respect to the grand total of purchases and
grand total of sales during tiie montii covered by the report.

to the

Basic Dcflnitions

Ouarteriy reports are

The term foreigner" as used in the Treasury reports covers all
and individuals domiciled outside the United States,
including U.S. citizens domiciled abroad, and tiie foreign branches,
subsidiaries, and other affiliates abroad of U.S. banks and business
concerns; tiie central governments, centi'al banks, and other official
institutions of foreign counti-ies, wherever located; and international
and regional organizations, wherever located. The term "foreigner"
institutions

also includes persons

known by

in tiie

United States to the extent that they are

and commercial concerns,
other depository
enterprises if their

filed

by exporters, importers,

industrial

financial institijtions other than banks,

institijtions,

brokers,

and

other

nonbanking

liabilities to, or claims on, unaffiliated foreigners at
quarterend exceed specified exemption levels. Effective March 31
1982. this exemption level was set at $10 million, up from $2 million.

Nonbanking enterprises also report

for

each monthend

their U.S.

dollar-denominated deposit and certificates of deposit claims of $10
million or more on banks abroad.

reporting institutions to be acting on behalf of foreigners.

In general, data are reported opposite the foreign country or
geographical area in which the foreigner is domiciled, as shown on
the records of reporting institutions. For a number of reasons, the
geographical breakdown of the reported data may not in all cases
reflect the ultimate ownership of the assets Reporting institutions
are not expected to go beyond the addresses shown on their
records, and so may not be aware of the counOy of domicile of the
ultimate beneficiary.
Furthermore, U.S. liabilities arising ft-om
deposits of dollars with foreign banks are reported in the Treasury
statistics as liabilities to foreign banks, whereas the liability of the
foreign bank receiving the deposit may be to foreign official
institutions or to residents of another country.

Data pertaining

to

branches or agencies

institutions are reported opposite tiie country to

of

foreign

which the

official
official

belongs. Data pertaining to international and regional
organizations are reported opposite the appropriate international or
regional classification except for the Bank for International Settiements, which is included in the classification "Other Europe."
institution

Description of Statistics

Section
presents data on liabilities to foreigners reported by
banks, other depository institutions, brokers, and dealers in the
United States Beginning April 1978, the following major changes
were made in the reporting coverage: Amounts due to banks' own
foreign offices are reported separately; a previous distinction
tsetween short-term and long-term liabilities was eliminated; a
separation was provided of the liabilities of the respondents
themselves from their custody liabilities to foreigners; and foreign
currency liabilities are only available quarteriy. Also, beginning April
1978, the data on liabilities were made more complete by extending
to securities brokers and dealers the requirement to report certain of
their own liabilities and all of Uieir custody liabilities to foreigners.
Effective as of January 31 1985, savings and loan associations and
otiier thntt institutions began to file the TIC banking forms. Previously
Oiey had reported on TIC forms for nonbanking enterprises.
I

,

institutions,

Section II presents the claims on foreigners reported by banks,
other depository institijtions, and brokers and dealers in the United
States. Beginning with data reported as of tiie end of April 1978. a
distinction was made between banks' claims held for their own
account and claims held for their domestic customers. The former
are available in a monthly series whereas the latter data are

bank holding companies. International Banking Facilities (IBF's),
securities brokers and dealers, and nonbanking enterprises in the

collected on a quarteriy Isasis only. Also, the distinction in reporting
of long-term and short-term compxjnents of banks' claims was

Reporting Coverage

Reports are required from banks, other depository

discontinued. Matijrity data began to be collected quarterly on a time
remaining to maturity basis as opposed to the historic original
matijrity classification.
Copies

ot the reporting

Data Management, Offioe
ol the

of

forms and instructions

may be

ottained from the Oftice of

the Assistant Seaetafy for InternationaJ Affairs,

Treasury, Washington. D.C. 20220. or from

district

Depanment

Federal Reserve t>anla.

a quarterly basis

only.

Foreign currency claims are also collected on
Beginning March 1981. this claims coverage

75

CAPITAL MOVEMENTS
was extended

to certain

items

in

the

hands

the United States See notes to section
reporting of thrift institutions.

and dealers in
above concerning the

of brokers
I

Another important change in the claims reporting, beginning
quarterly data as of June 30, 1 978, was the adoption of a
broadened concept of "foreign public borrower," which replaced the
previous category of "foreign official institution" to produce more
meaningful information on lending to the public sector of foreign

with

claims held through banks in the United States. Beginning with data
reported as of December 31, 1978, financial liabilities and claims of
reporting enterprises are distinct from their commercial liabilities and
claims; and items are collected on a time remaining to maturity basis
instead of the original maturity basis used previously.

new

countries.

The term

"foreign public borrower"

encompasses

central

governments and departments of central governments of foreign
countries and of their possessions; foreign central banks, stabilization funds, and exchange authorities; corporations and other
agencies of central governments, including development banks,
development institutions, and other agencies which are majorityowned by the central government or its departments; State,
provincial, and local governments of foreign countries and their
departments and agencies; and any international or regional
organization or subordinate or affiliated agency thereof, created by
treaty or convention between sovereign states.
Section 111 includes supplementary statistics on U.S. banks'
and claims on, foreigners. The supplementary data on
banks' loans and credits to nonbank foreigners combine selected
information from the TIC reports with data from the monthly Federal
Reserve 2502 reports submitted for major foreign branches of US.
banks. Other supplementary data on U.S. banks' dollar liabilities to,
and banks' own dollar claims on, countries not regularly reported
separately are available semiannually in the June and December
issues of the Treasury Bulletin.
liabilities to,

Section IV shows the liabilities to, and claims on, unaffiliated
by exporters, importers, industrial and commercial
concerns, financial institutions other than banks, other depository
institutions, brokers, and other nonbanking enterprises in the United
States. The data exclude the intercompany accounts of nonbanking
enterprises in the United States with their own branches and
subsidiaries abroad or with their foreign parent companies. (Such
transactions are reported by business enterprises to the Department
of Commerce on its direct investment forms.) The data also exclude
foreigners

Section V contains data on transactions in all types of long-term
domestic and foreign securities by foreigners as reported by banks,
brokers, and other entities in the United States (except nonmarketable U.S. Treasury notes, foreign series; and nonmarketable
U.S. Treasury bonds and notes, foreign currency series, which are

shown in the "International Financial Statistics" section, table lFS-3).
The data cover new issues of securities, transactions in outstanding
issues, and redemptions of securities. They include transactions
executed in the United States for the account of foreigners, and
transactions executed abroad for the account of reporting institutions
and their domestic customers. The data include some transactions

which

are

classified

payments accounts.
the reporting of

The

as

Also,

direct

investments

see notes

for section

in
I

the

balance

of

above concerning

thrift institutions.

breakdown of the data on securities
shows the country of domicile of the foreign buyers and

geographical

transactions

case of outstanding issues, this may
from the country of the original issuer. The gross figures

sellers of the securities; in the
differ

contain

some

offsetting transactions

between

foreigners.

The

net

figures for total transactions represent transactions by foreigners
with U.S. residents; but the net figures for transactions of individual

countries

and areas may include

some

transactions

between

foreigners of different countries.

The data published in these sections do not cover all types of
reported capital movements between the United States and foreign
countries. The principal exclusions are the intercompany capital
transactions of nonbanking business enterprises in the United States
with their own branches and subsidiaries abroad or with their foreign
parent companies, and capital transactions of the U.S. Government.
Consolidated data on all types of international capital transactions
are published by the Department of Commerce in its regular reports

on the U.S. balance

of

payments.

-

76
CAPITAL
Section

I.

-

Liabilities to Foreigners

Table

CM-l-1. -

MOVEMENTS
Reported by Banks

Total Liabilities by

Type

in

the United States

of Holder

[In mill ions of dollars]

International
regional II

Foreign countries

and

Memoranda
liabilities
all foreigners
reported by IBF's 4/

Total

Official

institutions

Banlcs

1/

and other foreigners

Payable
End of

Total

calendar year

liabili-

or montii

ties
(1)

1984
1985
1986
1987r

1987-Sept.

r

Oct.
No».
Dec.

r

1988-Jan.

r

Feb.
Mar.
Apr.
May
June

r

r

r

r
r

July
Aug.
Sept.

p
p

Payable
in

Total

dollars

(2)

(3)

415.893
451,094
570,900
674,053

86,065
79,985
103,569
120,667

86,065
79,985
103,569
120,667

632,588
651,367
650.937
674,053
656,347
660.404
661.072
666,487
684,596
692,441
709.806
713.280
711,679

107,744
117,213
116.811
120,667
123,193
125.554
125.516
124,657
128,065
126,060
128.616
129.203
128,667

107,744
117,213
116.811
120,667
123,193
125.554
125.516
124,657
128,065
126,060
128.616
129,203
128,667

to

Payable

foreign
curren-

Payable
in

cies2/

Total

dollars

(5)

(6)

(4)

-

-

-

-

-

-

Payable

foreign
curren-

cies^/
(7)

Payable
in

Total

dollars

(8)

(9)

Payable
in

foreign
curren-

cies^/

dollars

cies^/

(10)

(U)

325,354
365,285
461,482
548,823

316,787
349,920
431,822
493,847

8,567
15,365
29,660
54,976

4,473
5,824
5.849
4,563

4,454

20

5,821
5,807
4,464

42
99

516,442
529,840
527.857
548,823
527,179
525,968
529.445
537,178
549,564
558.423
574.075
579,249
575,168

470,756
484,155
482,171
493,847
472,203
470,993
474,066
481,799
494.185
503.457
519.109
524,283
520,202

45,686
45.686
45,686
54,976
54.976
54.976
55.379
55,379
55,379
54,966
54.966
54.966
54,966

8,402
4,313
6,270
4,563
5.974
8.881
6.111
4,653
6,967
7,959
7,115
4,829
7,843

7,941
3.852
5,809
4,464
5.875
8.782
6,033
4,575
6,889
7,879
7,036
4,749
7,764

1/ Includes Bank for International Settlements.
7/ Principally the International Bank for Reconstruction and
Development and the Inter-American Development Bank.
3/ Data as of preceding quarter for non-quarter-end months.
T/ Establishment of International Banking Facilities (IBF's)
permitted beginning December 1981.

Payable

foreign
curren-

3

461
461
461
99
99
99
78
78

78
80
80
80
80

(12)

170,736
183,175
226,607
261,999

4,549
10.191
22,387
44,803

250,143
262.620
251,813
261,999
245.587
246.418
245,014
241,209
248,519
258.917
262.299
267,677
265,695

36,624
36.624
36,624
44,803
44.803
44.803
46,401
46,401
46,401
45.585
45.585
45,585
45,585

Note. --Total liabilities include liabilities previ ousl y c ass
fied as either "short term" or "long term" on the Treasury reports
filed by banks.
The maturity distinction was discontinued with
new reports filed as of Apr. 30. 1978. and historical series adjusted accordingly.
See introductory text to Capital Movements
tables for discussion of changes in reporting.
1

i

77

CAPITAL MOVEMENTS

TO FOREIGNERS
CALENDAR YEARS 1983-88

LIABILITIES

Reported by International Banking

Facilities

and by Banks

in

the

United States
750

-I

1983

1984

1985

1986

END OF PERIOD

1987

1988, 3dQtr.

78
CAPITAL
Table

CM-l-2. -

MOVEMENTS

Total Liabilities by Type, Payable

Part A

-

Foreign Countries

[In millions of dollars]

in

Dollars

.

CAPITAL MOVEMENTS
Table

CM-l-3. -

Total Liabilities by Country

[Position at end of period In millions of dollars:

Austria
Belgium-Luxembourg
Bulgaria
Czechoslovalila
Denmark

Finland
France
German Democratic Republic
Germany
Greece
Hungary
Italy

13,325

Netherlands
Norway
Poland
Portugal
Romania
Spain
Sweden
Switzerland
Turkey
United Kingdom
U.S.S.R
"usoslavla
Other Europe
Total

1,438
29,486
429
79,757

Europe

Canada
Latin America and Caribbean:

*rgentlna
Bahamas
Bermuda

6,039
58,001
2,856
5,393
43,925
2.061
3,111

Brazil
British West Indies
Chile

Colombia
Cuba
Ecuador
Guatemala
Jamaica
Mexico
Netherlands Antilles
Panama
Peru
Trinidad and Tobago
Uruguay
Venezuela
Other Latin America
and Caribbean
Total Latin America

11

14.564
4,987
7,604
1,167

and Caribbean
Asia:
China:

Mainland
Taiwan
"ong Kong
India
Indonesia
Israel
Japan

1,6 08

7.792
9,2 94
717

1,470
1,604
27,181
1,670

Lebanon
Malaysia
Pakistan
Philippines
Singapore
Syria
Thailand
Oil-exporting countries 1/
Other Asia
Total Asia

Africa:
Egypt
Ghana
Liberia
South Africa
Zaire
Oil-exporting countries II
T.
Other Africa
Total Africa

Other countries:
Australia
All other
Total other countries
Total

foreign countries..

International and regional:
International
European regional
Latin American regional
Asian regional
African regional
Middle Eastern regional ...
.

Total International
and regional

Grand total

.

79

80

CAPITAL MOVEMENTS
Table CM-l-4. - Total Liabilities by Type and Country, as of Sept. 30, 1988, Preliminary
[Position in millions of dollars]
Tot.

To foreign official

Total

Payable

mated

Payable
Banks'

Custody

Deposits

foreign

iabi
banl(

81
CAPITAL MOVEMENTS
Section

II.

- Claims

on Foreigners Reported by Banks

Table

CM-ll-1. -

Type of claim
Total

claims

Payable In dollars
own claims on foreigners...
Foreign public borrowers
Unaffiliated foreign banks:
Deposits
Other
Own foreign offices
All other foreigners

Banks'

Claims of banks' domestic
customers
Deposits
Negotiable and readily
transferable Instruments
Collections and other

Payable in foreign currencies
Banks' own claims on foreigners...
Claims of banks' domestic
customers
Memoranda:
Claims reported by IBF's 1/
Payable in dollars
T
Payable 1n foreign currencies

Customer liability on acceptances
Claims with remaining
maturity of 1 year or less:
On foreign public borrowers
On all other unaffiliated
foreigners
Claims with remaining
maturity of more than 1 year:
On foreign public borrowers
On all other unaffiliated
foreigners

1/

447.363

507,628

430,489

478.650

401,608
60.507

444,745
64,095

48.372
68.282
174.261
50.185

57,484
65.462
211,533
46.171

28.881
3,335

33.905
4.413

19.332
6,214

24,044
5.448

16.874
16.294

28.978
26.470

580

2.507

194,330
186.123
8.207

240,510
222.236
13,274

28.487

25.706

26.302

24.842

134.522

135.714

34,512

39,103

32.567

32.637

Establishment of International Banking Facilities (IBF's) per
beginning December 1981.

in

Total Claims by Type

486.145

the United States

82

CAPITAL MOVEMENTS

CLAIMS ON FOREIGNERS

CALENDAR YEARS
Reported by International Banking

1983-88

Facilities

and by Banks

in

the

United States
550

1983

1984

1985

1986

END OF PERIOD

1987

1988, 2dQtr.

83
CAPITAL
Table CM-ll-2.

osUion

Aus

Belgium-Luxembourg
Bulgaria
Czechoslovakia
Denmark
Finland
France
German Democratic Republic
Germany
Greece

1.003
1,049

13,069

"ungai-J

Italy

Netherlands
Norway
Poland
Pnrtunal
Romania
Spain
S»eden
Switzerland
Turkey
United Kingdom
U.S.S.R
Yugoslavia
Other Europe

759

US
1,631
2.170
3,800
1,578
85,599
387

1,908

Total Europe
nada
tin America and Caribbean:

12,495
60,935
476
36,086
49,787
6,656
2,967

Argentina
Bahamas
Bermuda
Brazil
British Nest Indies
Chile
Colombia
Cuba
Ecuador
Guatemala
Jamaica
Mexico
Netherlands Antilles
Panama
Peru
Trinidad and Tobago
Uruguay
Venezuela
Other Latin America
and Caribbean

1

2.536
31,367
1,328
5,746
1,689

Total Latin America
and Caribbean
ila:

China:

Mainland
Taiwan
Hong Kong

?

India

Indonesia
Israel

Japan
Korea
Lebanon
Malaysia
Pakistan
Philippines
Singapore
Syria
Thailand
011-exportlog countries
Other Asia

\.

Total Asia
frica:
Egypt
Ghana
Liberia

Morocco
South Africa
Zaire
Oil-exporting countries^
Other Africa
Total Africa

ountrles:
Australia
All other

0th

Total other countries.
Total

.

.

foreign countries.

ternational and regional:
International
European regional..
Aslin regional
African regional
Middle Eastern regional
Total international
and regional

Grand total

'.'.

..

-

MOVEMENTS
Total Claims by Country
mimons of dollar

at end of period In

84

CAPITAL MOVEMENTS
Table CM-ll-3. - Total Claims on Foreigners
by Type and Country Reported by Banks

Austria
Belg1uni-Lii«e«ibourg..
Bjlgari'a

Czechoslovakia
Denmark
Finland
France
German Democratic Re
Germany
Greece
Hungary
Italy

Netherlands
Poland

Romania
Spain
Sweden
Switzerland
Turkey
United Kingdom
U.S.S.R
Other Europe
Total

Europe

atin America and Carl

Argentina
Bahamas
Bermuda
Brazil

British West Indies.
Chile
Col ombi a
Cuba
Ecuador
Guatemala

Netherlands'Antilles
Trinidad and Tobago.
Uruguay
Venezuela
Other Latin America
and Caribbean
Total Latin America
and Caribbean

China:

Mainland
Taiwan
Hong Kong
India

Indonesia
Israel

Japan
Korea

Malaysia
Pakistan
Philippines
Singapore
Syria
Thailand
Other Asia
Total

Asia

frica:
Egypt
Ghana
Liberia

South Africa
Zaire
Other Africa
Total

Africa

itber countries:

Australia
All other
Total

other countri

Total

foreign count

International
European regional...
Latin American regie
Asian regional
African regional

2.008

In

the United States, as of June 30, 198

85
CAPITAL MOVEMENTS
Section

III.

- Supplementary
Table

Liabilities

CM-III— 1. —

and Claims Data Reported by Banks
Dollar Claims on

in

the United States

Nonbank Foreigners

[Position at end of period in millions of dollars]
Dollar claims of U.S. offices

Total

dollar

claims on no
bank foreign

1983
198«
1985
1986
1987r

1987-Aug.
Sept.
Oct.
Nov.
Dec.

1988-Jan.
Feb.
Mar.
Apr..
May..
June.
July
Aug.

1/

Federal Re

ve Board data

branches 1/

199,950

76,1 13

191 .928

176,160
166,711
158,003

75.952
63,880
68,454
66,237

44,970
43.062
46.812
41.812
41,329

162,214
164,088
162,770
166,028
158,003
156,008
154,081
154,040
153,044
152,477
154,026
150,998
150.134

67,204
69.113
66.965
71.250
66.237
65.407
63,789
63,451
63,473
62,910
64,985
64,481
64,685

42,485
42.104
42.332
42.134
41,329
40,274
40,614
39,797
40,091
39,824
40.481
39.693
39,655

52,525
52,871
53,473
52,644
50,437
50,327
49,678
50,792
49,480
49,743
48,560
46,824
45,794

86

CAPITAL MOVEMENTS
Table CM-lll-2.
in

-

Dollar Liabilities to, and Dollar Claims on, Foreigners

Countries and Areas Not Regularly Reported Separately
[Position at end of perioil in millions of dollars]
Total

Other Eu
Cyprus

Monaco
Other Latin America and Caribbe
398

Dominican Republ
El Salvador
French West Indi
French Guiana.
Guyana
.

Honduras.
caragua
Paraguay.

Ni

Other Asia:
Afghanis!
Banglades
mbodia

Nepal
Sri

(formerly

.

La

Vietna
(Aden).

Angol

Ethiopia, includi
Guinea
Ivory Coast
Kenya
Madagascar
Mauritania
Niger.
Rwanda
Sudan.

other:
H

Hebrides.

Papua New Guinea.
U.S. Trust Territo
the Pacific Islan
.

liabilities

Total

banks'

CAPITAL
Section

-

IV.

Liabilities to,

and Claims on, Foreigners Reported by Nonbanking Business Enterprises
Table

CM-IV-1. -

Total Liabilities and Claims by Type

[PosUion at end of period

Type of

nabJHty

Total

liabilities

or claim

Payable in dollars
Financial
Commercial
Trade payabl es
Advance receipts and other
:

Payable in foreign currencies.
Financial
Commercial
Trade payables
Advance receipts and other
:

Total

claims

Payable in dollars
Financial:
Deposits
Other
Commercial
Trade receivables
Advance payments and other
:

Payable in foreign currencies.
Financial
Deposi ts
Other
Commercial
Trade receivables
Advance payments and other
:

:

26,389
12,553

87

MOVEMENTS

in

millions of dollars]

in

the United States

88

CAPITAL MOVEMENTS
Table

Austr
Bel9<
Sulga

epublt

aland.

United Kingdom
U.S.S.R

a1

Eur

and Ca

olombi

inidad and Tobago.

Japan.

Singapor

Africat
Egypt

al

Afr

572

CM-IV-2. -

Total Liabilities by Country

CAPITAL MOVEMENTS
Table CM-IV-3. - Total Llabllltiss by Type and Country, as of June 30, 1988, Preliminary
[Position at end of period in imllions of dollars]

urope:
Austr
Bel 91

Bul9a

Hunga

United Kingdom.
U.S.S.R
Yugoslavia

14.549

89

.

90

CAPITAL MOVEMENTS
-IV-4.

Austria
Belliui-Luxembourg
Bulgaria
Czechoslovakia
Denmark
Finland
France
German Democratic Sepubl
Germany
Greece
Hungary
Italy

Netherlands
Norway
Poland
Portugal
Sweden
Switzerland
Turkey
United Kingdom
U.S.S.R
Yugoslavia
Other Europe
Total

Europe

10,158

Canada
Latin America and Caribbean:

*rgentina
Bahamas
Bermuda
Brazil
British Uest Indies
Chile

Colombia
Cuba
Ecuador
Guatemala
Jamaica
Mexico
Netherlands Antilles
Peru

Trinidad and Tobago
Uruguay
Venezuela
Other Latin America
and Caribbean
Total Latin America
and Caribbean

Asia:
China:
•lainland

Taiwan
Hong Kong
India
Indonesia
Israel

Lebanon
Malaysia
Pakistan
Philippines
Singapore
Syrfa
Thailand
Oil-exporting countries 1/
Other Asia
T.
Total Asia

Africa:
Egypt
Ghana
Liberia
'.'.'.'.'.'.'.!'.'. '.'.'.

South Africa.
Zaire
Oil-exporting countries 2/
Other Africa
T
Total Africa

Other countries:
Australia
All other
Total other countries...
Total

foreign countries.

International and regional:
International
European regional
Latin American regional
Asian regional
African regional
Middle Eastern regional
.

.

Total International
and regional

Grand total

.

-

Total Claims by Country

.

91

CAPITAL MOVEMENTS
Table CM-IV-5. - Total Claims by Type and Country, as of June 30, 1988
[Position at end of period in

mmions

of dollars]

Total

financial
claims

Bel gi urn- Luxembourg

Bulgaria
Czechoslovalcia
Oenmarli

Finland
I^rance

German Democratic Republi
Germany
Greece
Hungary
Italy

Netherlands
Poland.'..!'.!".'.! ...

.'.'.'.'.'.'.

Po'-tugal

Romania
Spain
S«eden
Switzerland
Turkey
United Kingdom
U.S.S.R
Yugoslavia
Other Europe
Total Europe

17,395

anada
atin America and Caribbean
Argentina
Bahamas
Bermuda
Brazil
British West Indies
Chile
Colombia
Cuba
Ecuador
Guatemala
Jamaica

Mexico
Netherlands Antilles
Peru
Trinidad and Tobago

Uruguay
Venezuela
Other Latin America and
Total

C

Latin America and

China:

Mainland
Taiwan
Hong Kong
India

Indonesia
Israel

Japan

Lebanon
Malaysia
Paliistan

Philippines
Singapore
Syria

Thailand
Other Asia
Total Asia

frica:
Egypt
Ghana

Morocco
South Africa
Zaire
Other Africa
Total Africa

ther countries:
Austral ia
All

other

Total

other countries.

Total

foreign countries.

.

nternational and regional
International
European regional
Latin American regional..
Asian regional
African regional
liddle Eastern regional ..
:

Total

international and

Denominated
in dollars

92
CAPITAL

-

Transactions
Table

of

in

MOVEMENTS

Long-Term Securities by Foreigners Reported by Banks and Brokers

CM-V— 1. -

Foreign Purchases and Sales of Long-Term Domestic

dollars; negative figures indicate net sales by foreigners or

a

in

the United States

Securities by Type

net outflow of capital

from the United States]

93
CAPITAL MOVEMENTS
Table

CM-V— 3. -

Net Foreign Transactions

in

Long-Term Domestic Securities by Type and Country

ble Tr

Corporate bond

Calendar Jan.
July
Calcnda
year
through through year
1987
Sept.p Sept.p
1987

Austria
Sel glum-Luxembourg

Ffnland
France
German Democratic RepubHc
Germany
Greece
Hungary
Italy

Netherlands
Hor»ay
Poland
Portugal
Domania
Spain
Sweden
Switzerland
Turkey
United Kingdom
U.S.S.R
'ugoslavla
Other Europe

1987

Sept.p

Sept.p

3,585

1,663

11,365

-71

-1,360

1,782

11,535

1987

2.186
22
290
>

13,330
142
26
24
913
792
•

210
1.917

-1,062

15

1

3.975

3,233

36

1,623

380

18,309

956

20,132

-1

711

Total Europe

23.716

12.247

-3.638

1.857

4.526

Latin America and Caribbean:
Argentina
Bahamas
Bermuda
Brazil
British Best Indies
Chile
Colombia
Cuba
Ecuador
Guatemala
Jamaica
Mexico
Netherlands Antilles
Panama
Peru
Trinidad and Tobago
Uruguay
Venezuela
Other Latin America
and Caribbean
Total Latin America
and Caribbean

2
9

-1.200
-648
5

-31
5

150
I6_

13
8

868
-3
504
•

86

-3,895
44

-3,142
1_6_

4,488
-40
1

-23
2

on-exporting countries 2/

~

Total Africa

Other countries:
Australia
All other

foreign countries

international

5

391

Africa:
Egypt
Ghana
Liberia
Morocco
South Africa
Zaire

Latin American regional.
Asian regional
African regional
Middle Eastern regional.

-12

-196

Asia

International and regional
International

-87

-89
9,794

Lebanon
Malaysia
Pakistan
Philippines
Singapore
Syria
Thailand
Oll-exporting countries 1/
Other Asia
T.

Other Africa

-1

-394
291
-84
-239

-2,192

Asia:
China:
Mainland
Taiwan
long Kong
India
Indonesia
Israel
Japan

Total

...

-

661

Canada

Total

.

Sept.p

-280
653
-45

Bulgaria
Ciechoslovaiila
Denmark

Total

.

Sept.p

Corpor

19,932

2,969

.

.

Sept.p

Sept.p

94

CAPITAL MOVEMENTS

NET PURCHASES OF LONG-TERM DOMESTIC
SECURITIES BY SELECTED COUNTRIES
Calendar Years 1984 through 1988, Third Quarter
^D

-

95
CAPITAL

MOVEMENTS

Table CM-V-4. - Foreign Purchases and Sales of Long-Term Securities,

by Type and Country, During Third Quarter 1988, Preliminary
ale; by foretgne

Total

hases notes
111

(21

(31

3.775
1

100,391

l.UO

Guatemala
Janatca..
Mexico...

Trln

I

Tobago.

Malaysia..
Pakistan.
Philippine
.

agencies Bonds Stocks
(41

(5)

Bon
161

bonds
sales notes
181

(91

96
CAPITAL MOVEMENTS
Table

CM-V-5.

-

Foreign Purchases and Sales

ot

Long-Tefnn Securities

by Type and Country, During Calendar Year 1987

sales notes
18)

1,804

(91

agencies Bonds Stoclis
(101

111)

(121

Bonds Stoclis
(13)

(14

97

FOREIGN CURRENCY POSITIONS
INTRODUCTION
Background
Data have been collected since 1974 on the foreign currency
positions of banks and nonbanklng firms in the United States, and on
those of foreign branches, majority-owned foreign partnerships, and
majority-owned foreign subsidiaries of U.S. banks and nonbanklng
firms. Reports cover five major foreign exchange market currencies
and US. dollars held abroad. Reporting has been required pursuant
to title
of Public Law 93-110, an amendment to the Par Value
Modification Act of September 21, 1973, and implementing Treasury
regulations. Statistics on the positions have been published since
March 1977 beginning with data for December 1975.
II

"Majority-owned foreign partnerships" are those organized under the laws of a foreign country in which one or more nonbanklng
concerns or nonprofit institutions in the United States, directly or
indirectly, own more than 50 percent profit interest. "Majority-owned
foreign subsidiaries" are foreign corporations in which one or more
nonbanklng business concerns or nonprofit institutions located In the
United States, directly or Indirectly, own stock with more than 50
percent of the total combined voting power of all classes of stock
entitled to vote, or more than 50 percent of the total value of all
classes of stock.

Reporting Threshold

The

report forms

and

instructions

used

in

the collection of bank

data were revised effective with reports as of March 16, 1983, for the
weekly reports. The most recent revision of the nonbank foreign
currency forms (see below) became effective as of the last business
day of March 1983.

Common

Definitions

and Concepts

The term "United

States'

means the States
Commonwealth

States, the District of Columbia, the

American Samoa, Midway

of the

United

of Puerto Rico,

Island, the Virgin Islands,

and Wake

Is-

The term "foreign" means locations other than the "United
The term "worldwide" is used to descnbe the sum of "United
States" and "foreign" data.
land.

States."

Data

for the

United States include amounts reported by sole
and corporations in the United States

proprietorships, partnerships,

Including the U.S. branches

and subsidiaries

of foreign

nonbanklng

concerns. In the case of "nonbanklng firms' positions," and the
agencies, branches, and subsidiaries located in the United States of
foreign banks and banking Institutions, in the case of the weekly
"bank positions."

Data for "foreign branches" and "abroad" Include amounts reported by the branches, majority-owned partnerships, and majority-

The exemption level applicable to banks and banking instituwas $10 million equivalent through January 1982, when was
raised to $100 million The exemption level applicable to nonbanklng
business concerns and nonprofit institutions was $1 million equivalent on all nonbank forms from March 1975 through November 1976.
It was raised to $2 million equivalent on the monthly reports of positions held in the United States from November 1976 through September 1978. The exemption level was raised to $3 million on foreign
subsidiary positions on June 30, 1977, and for positions held In the
United States on September 30, 1978. The exemption level for nonbanklng firms was raised to $100 million on positions in the United
States in January 1982 and on foreign branch and subsidiaries positions In March 1982.
tions

it

Firms must report their entire foreign currency position In a
if a specified U.S. dollar equivalent value
reached in any category of assets, liabilities, exchange contracts
bought and sold, or the net position in the currency. In general, exemption levels are applied to the entire firm. In reports on their foreign branches, majority-owned foreign partnerships, and majorityowned foreign subsidiaries, U.S. banks and nonbanks are required
to report the U.S. dollar-denominated assets, liabilities, exchange
contracts bought and sold, and net positions of those branches,
specified foreign currency
is

partnerships,

and subsidiaries with reportable positions

In

the speci-

fied foreign currencies.

owned

subsidiaries of U.S. banking and nonbanklng concerns. In
general, these data do not reflect the positions of foreign parents or
foreign parents' subsidiaries located

company accounts. The data

abroad except through

inter-

Description of Statistics

include the foreign subsidiaries of a

few foreign-owned U.S. -based corporations.

Data collected on the Treasury foreign currency forms are pubIn the Treasury Bulletin In seven sections. The first section
summary of wortdwide net positions In all of the currencies reported. Sections
through VI each present data on a
specified foreign currency. Section VII presents the U.S. dollar positions of the foreign branches and subsidiaries of U.S. firms which are
lished

Assets, liabilities, and foreign exchange contract data are reported on the basis of time remaining to maturity as of the date of the
report, regardless of the original maturity of the instrument Involved.
"Spot" means due for receipt or delivery within 2 business days from
the date of the report. "Short-term"

from the date of the report.

means maturing

In

1

year or less

presents a

II

required to report

in

one

or

more

of the specified foreign currencies.

98
FOREIGN CURRENCY POSITIONS

— Summary Positions
Section
FOP— — 1, — Nonbanking Firms'
I.

Table

1

Table FCP-l-2.
(In

mUlions

-

Positions-

Weekly Bank Posltlons-

foreign currency units,
except yen, which is in billions)
of

1/06/88
1/13/88
1/20/88
1/27/88

-97
-35
202
87

-3.102
-4,802
-3.918
-3.779

210
536
410

2/03/88
2/10/88
2/17/88
2/24/88

-28
-381
-435
-433

-4,962
-1,641
r-1,256
r-635

316
293
218
153

-1,185
-1.206
-6

-439
-1,164
r-587

-920

329

7.889
7,536
4,963
3,866

3/02/88
3/09/88
3/16/88
3/23/88
3/30/88

220
189

r-66
r-672
-208
r-3,337
r-2,790

88
163
161

r-514
-968
-677
-728
-790

219
r758
287
536
rl82

4,310
5,234
5,342
4,597
4,674

4/06/88
4/13/88
4/20/88
4/27/88

-255
88
440

-4,119
-4.302
-3,068
-4,151

5/04/88
5/11/88
5/18/88
5/25/88

142
-58
189
165

-1,477
-845
-3,263
-4,343

6/01/88
6/08/88
6/15/88
6/22/88
6/29/88

511

614
833
132

-5,290
-4,946
-4.546
-3,627
-2,307

74

145
105

151

-9

140

278
191

-1.907
-3.174
-2.992
-1.309

220
1,511
718

-1,000

4.150
1,635
3.562
5,479

99
FOREIGN CURRENCY POSITIONS
Section

Table

II.

1

Ufes 2/

Canadian Dollar Positions

II

lln

Liabi

—

FCP— — 1. — Nonbanking

mm ions

Exchange bought

Table FCP-ll-2.

-

Firms' Positions

-

of dollars)

V

Exchange sold

Weekly Bank Positions

(In millions of dollars)

V

Net
position 5/

Exchange
rate 6/

Posit
held

r9,665

0.8106

Uorldwide

10,428

0.8247

Worldwide

100

101
FOREIGN CURRENCY POSITIONS
Section

Table

IV.

I

Report
date

-

Japanese Yen Positions

FCP— IV-1. - Nonbanking
In

Firms' Positions

bill tons of yen)

102
FOREIGN CURRENCY POSITIONS
Section

Table

V.

- Swiss

(In mill ions of

ets

—2/

Liabilities

~3/

Franc Positions

FCP-V-1. - Nonbanking

Exchange bought ~
4/

Firms' Positions^

francs)

Exchange sold 4/

Net
position 5/

Exchange
rate 6/

Posit
held

103
FOREIGN CURRENCY POSITIONS
Section

VI.

Table FCP-VI-1.
(

ets

~2/

Liabilities II

~

In

-

Sterling Positions

- Nonbanking

Firms' Positions'

millions of pounds)

Exchange bought

-

Table FCP-Vl-2.

n

i

~M

Exchange sold 4/

~

Weekly Bank Positions

ons of pounds

)

Net
position 5/

Exchange
rate 6/

r3,723

1.8865

Worldwide

2.138

1.7085

Worldwide

Posit
held

104
FOREIGN CURRENCY POSITIONS
VII. - U.S. Dollar Positions Abroad
- Nonbanking Firms' Foreign Subsidiaries'

Section

Table FCP-VII-1.

I

ions of dol

Positions

la

Exchange bought 4/

Table FCP-Vll-2. - Weekly Bank Foreign Subsidiaries' Posltlons(

Assets

J^/

Liabil ities 2/

In

mi

1

lions of dollars)

Exchange bought

_1_0/

Exchange sold 10/

1/06/88
1/13/88
1/20/88
1/27/88

330,950
328,415
339,067
342,709

339,084
339,223
348,762
351,055

712,073
655,631
700,437
679,215

699,789
643,188
687,180
665,390

2/03/88
2/10/88
2/17/88
2/24/88

337,989
339.345
342,751
339,014

346,836
346,830
350,904
349,475

667,811
671,312
672,244
663,832

651,075
656,291
659,138
649,505

3/02/88
3/09/88
3/16/88
3/23/88
3/30/88

329,835
333,724
340,956
329,574
333,802

338,984
344,258
349,179
337,769
340,032

642,830
701,737
652,840
671,789
722.029

629,371
685,969
639,275
658,997
711,125

4/06/88
4/13/88
4/20/88
4/27/88

328,257
326,710
325,825
334,183

337,659
335,141
334,381
341,297

666,274
673,661
673,760
678,278

652,044
659,992
659,321
664,319

5/04/88
5/11/88
5/18/88
5/25/88

326,785
326,241
331,655
332,568

333.415
332,385
337,917
339,643

661,710
663,862
679,265
661,499

649,198
652,739
666,137
648,516

5.882
4,979
6.866
6.008

6/01/88
6/08/88
6/15/88
6/22/88
6/29/88

342,482
336.786
342,690
338,233
341,794

348,455
343,222
349.951
343,820
346,880

728,620
722,872
732,015
772,816
841,299

714.919
711,624
715,779
757,716
824.795

7.728
4.812
8.975
9.513
11.418

footnotes on following page.

4,150
1,635
3,562
5,479
7,889
7.5 36

4,953

,310
.234
.342
.597
.674

105

FOREIGN CURRENCY POSITIONS
FCF-VH

Footnotes to Tables FCP-I through

SECTION

I

Excludes receivcbles and Installment paper sokj or discounted before matuhty, fixed

Worldwide net positions on the
business concerns

In

last

business day of the calendar quarter

of

nont>anklng

the United Stales and their foreign branches and majority-owned

partnerships and subsidiaries. Excludes receivables and Installment paper which have been
sold

or

discounted

tiefore

maturity,

U.S.

parent

companies'

investment

In

their

assets

(plant

and equipment),

and

parents'

investment

In

majority-owned

foreign

sutsldiarles.

Capitalized plant

and equipment leases are excluded.

Includes both spot and forward exchange rates.

majority-owned foreign subsidiaries, fixed assets (plant and equipmem). and capitalized

Columns

leases lor plant and equipment.

1

and 3 less columns 2 and

are expressed

Weekly worldwide net positions

of

banks and banking

Institutions in the

United States,
dollar.

and

their foreign

and

liabilities.

4.

Representative rates on the report date. Canadian dollar and United Kingdom pound rates

Foreign branches and majority-owned partnershps and subsidiaries only.

branches and majority-owned foreign subsidiaries. Excludes

in

U.S. dollars per unit of foreign currency,

The source

of the

Banks and banking
majority-owned

Institutions

subsidiaries. In

in

seclbn

VII,

foreign

subsidiaries only.

° Excludes
II

THROUGH VII
concems

In

liabilities.

tx)th spot

and forward exchange conlraas.

the United States and their foreign

branches and majority-owned partnersh^ and subsidiaries.
foreign branches

capital assets.

Excludes capital
" Includes

Positions of nonbanking business

In

and majority-owned partnerships and subskJiar les

Columns 3 and 9

section VII positions of
only.

others

In

foreign units per U.S.

of

June 30. 1988.

the United States and their foreign branches and

Foreign branches and ntajority-owned subskjiaries only.

SECTIONS

all

automated representative rates changed as

capital assets

'^

See

footnote 6.

less

columns 6 and

12.

branches

and

majority-owned

106

EXCHANGE STABILIZATION FUND
INTRODUCTION
ments as

Background

liabilities,

event of liquidation

The Exchange

Stabilization

Fund (ESF) was established under

of the

IMF

they must be redeemed by the ESF only in the
or U.S. withdrawal from, the SDR Department

of,

or cancellation of

SDRs.

the Gold Reserve Act of January 30, 1934 (31 U.S.C. 822a). This act

authorized the establishment in the Department of the Treasury of a
stabilization fund to be operated under the exclusive control of the
Secretary of the Treasury, with the approval of the President, for the
purpose of stabilizing the exchange value of the dollar. Subsequent
amendment of the Gold Reserve Act modified the original purpose
somewhat to reflect termination of the fixed exchange rate system.

SDR ce/t/7?cafes.-lssued to the Federal Reserve System
against SDRs when SDRs are "monetized" and the proceeds of the
monetization are deposited in an ESF account at the Federal Reserve Bank of

New

York.

Description of Tables

The resources of the fund consist of
in
U.S. Government securities,
(SDRs), and balances of foreign currencies.
invested

dollar balances,

partly

drawing

rights

special

sources of income or losses for the
losses on holdings of and transactions in
foreign exchange, and the interest earned on assets.

The

been

principal

profits or

ESF have
SDRs and

Table ESF-1 presents the assets, liabilities, and capital of the
ESF. Data are presented in U.S. dollars or U.S. dollar equivalents
based on current exchange rates computed according to the accrual
method of accounting. The capital account represents the original
capital appropriated to the ESF by Congress of $2 billion, less a
subsequent transfer of $1.8 billion to pay for the initial U.S. quota
subscription to the IMF. Subsequent gains and losses since inception are reflected in the cumulative net income (loss) account.

Definitions

Special drawing
International

Monetary Fund

tional liquidity

and provide

(IIVIF).

additional international reserves,

be purchased and sold among

SDR

assets created by the
They serve to increase interna-

nprtfs. --International

eligible holders

a//ocaf/ons. -The counterpart of

based on members' quota

in

and may

through the IMF.

SDRs

the IMF. Although

issued by the IMF

shown

in

ESF

state-

Table ESF-2 presents the results of operations by quarter. Data
are presented in U.S. dollars or U.S. dollar equivalents computed
according to the accrual method of accounting. The "Profit (loss) on
foreign exchange" includes realized profits (losses) on sales of foreign currencies as well as revaluation gains (losses) on currencies
held. "Adjustment for change in valuation of SDR holdings and allocations" reflects the net gain (loss) on revaluation of SDR holdings

and

allocations for the quarter.

107

EXCHANGE STABILIZATION FUND
Table ESF-1. "Balances as of Mar. 31, 1988, and June 30, 1988
[In

Assets,

liabilities,

and

thousands

of dollars]

Mar. 31, 1988,
through

capital

June

30,

June

30,

1988

1988

Assets
U.S. dollars:
Held at Federal Reserve Bank of
Held with Treasury:
U.S. Government securities

Other
Special drawing

New York

528.565
(719.260)

1.067.000
9.180.071

;

Japanese yen
Pounds sterling
Swiss francs
filexlcan pesos
Argentine australs
Ecuador sucres
Yugoslavia dinars
Accounts receivable

4.158.128
459.449
18.924
26.708

(178.558)

160.000

(160.000)

99.275
(1.465)
(2.385)

3.979.570
558.724
17.459
24.323

1M.550

Total assets

21.125.518

Liabilities

«nd

capital

liabilities:

Accounts payable
Advance from U.S. Treasury (U.S. drawing
^
on IMF)
Total current

Other

521,282
1,067,000
9,899.331

rights

Foreign exchange and securities
German mari^s

Current

4,684,146

liabilities

liabilities:

Special drawing rights cenificates
Special drawing rights allocations

Total other

liabilrties

Capital:

Capital account

Net Income (loss) (see table ESF-2)

Total capital

Total

liabilities

and

capital

61 .452

62.026

1.067.000

1.067.000

1.128,452

Special Reports

TRUST FUND REPORTS

112
Civil
1

Service Retirement and Disability Fund

millions of dollars. Source:

Monthly Treasury SlalemenI

of

Recelpls and Ocillays of Ihe United Stales

Govemmenl]

113
Federal Disability Insurance Trust Fund
[In millions of dollafs.

Source: Monthly Treasury Statement

ol

Recalpls and Oullays of Ihe Uniled Stales Governmenl]

Expenditures other than Investments
Deposits
by States

Total

Interest

and profits on

Benefit

payments

Invest-

ments

1984
1985
1986
1987
1988

1989

20,179
20,113
22,657

17.812

14.480
15.200
16.075
18.500
21.510

22.360

17.775
18,657
19,530
20,435
21,416

24.132

23.228

23.223

22,373

1.460
1.469
1.598
1.892
1,738
1,848

1,895

1,741

1.731

1,685
3,318

284

200

2.423
1.777
1,919
1.755
1.647
1.983

1.864
1.863
1.920
1.856
1.948
1.879
1.876
1.820

1,806
1,807
1,850
1,793

Sep<

1 ,509
1,458
1,302
1,946
1,747
1,857
2.582
1.766
1 .638
2.853
1.723
2.278

1988

22.657

21.510

22.360

21,416

18,1362

(Est.)

1987 - Oct

Nov
Dec
1988- Jan

Feb
Mar
Apr

May
June
July

Aug

Fiscal

Expenditures other

Payments

ifian

1.618
1.587
1.885

648

1.156

695
1.585

18,459
19.372
20.242
21.291

3.423

Investments-Continued

1,791

1,812
1,826
1,788

114
Federal Hospital Insurance Trust Fund
[In millions of dollars.

Source: Monthly Treasury Slalemem

ol

Receipts and Outlays of the United Stales Governmanl]
Recet)ts

Net

1984
1985
1986
1987
1988

45,732
50,928
55,917
62,736
68,107

1989

(Est.)

1987 -Oct

Nov
Dec
1988

•

4,431
4.301
7.026

Jan

5.598

Feb
Mar

5.857
4.151
7.640

Apr

May

4.959

June

8.431

July

Sept

5,145
4,914
5,654

1988

68,107

Aug

Fiscal

74,454

115
Federal Old-Age and Survivors Insurance Trust Fund
[In

millions o( dollars. Source: Monthly Trsasufy

SlalemenI o( Receipts and Outlays

Receipts
Appropriations

of the

Unlied Slates Government]

Expenditures other than investments

116
Federal Supplementary Medical Insurance Trust Fund
[In

millions of dotlafs. Source: Monthly Treasury

Slalemenl

ol

Receipts and Outlays ot the United Stales Governmenl]
Receipts

Expenditures other than Investments

117
National Service Life insurance
[In

millions of dollafs. Source: Monthly Treasury

Slatemenl

of

Fund

Receipts and Oullays ot Ihe United Slates Governmenll

118
Railroad Retirement Account
fin

millions ot dollars. Source:

Monthly Treasury Slatemeni

ot

Receipts and Outlays o) the United Stales Governmentl

.

119

Unemployment Trust Fund
[In

millions ot dollars. Source: Monthly Treasury

Siaement

ot

Recelpls and Outlays

d Ihe Untied

Slales Govsrnment]

Receipts
Federal

Advances

Deposits

unemploymeni

unemployment
taxes

from the
general
fund

by Railroad

taxes

Slate

1984
1985
1986
1987
1988

1989

29,893

(Est.).

1987 -Oct

.

Nov
Dec.

.

1988 -Jan

.

Feb.
Mat

.

Apr.

May.
June
July

Aug

.

Sept.
Fiscal 1988.

Retirement

Board

120

Unemployment Trust Fund-Continued
[In

millions of dollars]

121

TOTAL RECEIPTS OF MAJOR TRUST FUNDS
FISCAL YEARS

1987

AND 1988

250

HL

LEGEND
1

B

2

200

3

I

L
L
I

O

4
5

150

N

n 1987

S

7

8

O
F

6

1988^

CIVIL SERVICE RETIREMENT AND
DISABILITY FUND
FEDERAL DISABILITY INSURANCE

TRUST FUND
FEDERAL HOSPITAL INSURANCE
TRUST FUND
FEDERAL OLD-AGE AND SURVIVORS
INSURANCE TRUST FUND
FEDERAL SUPPLEMENTARY
MEDICAL INSURANCE TRUST FUND
NATIONAL SERVICE LIFE INSURANCE

FUND
RAILROAD RETIREMENT ACCOUNT
UNEMPLOYMENT TRUST FUND

100

D
O
L
L

A
R

50

S

12345678

122

TOTAL EXPENDITURES OF MAJOR TRUST FUNDS
FISCAL YEARS 1987 AND

1988

200

B

LEGEND

180

1

I

L
L

160

I

O

140

S

120

O

100

2

n

1987

H

1988

6

TRUST FUND
FEDERAL HOSPITAL INSURANCE
TRUST FUND
FEDERAL OLD-AGE AND SURVIVORS
INSURANCE TRUST FUND
FEDERAL SUPPLEMENTARY
MEDICAL INSURANCE TRUST FUND
NATIONAL SERVICE LIFE INSURANCE

7
8

FUND
RAILROAD RETIREMENT ACCOUNT
UNEMPLOYMENT TRUST FUND

3
4

N
F

D
O

80

L
L

60

R

40

A

CIVIL SERVICE RETIREMENT AND
DISABILITY FUND
FEDERAL DISABILITY INSURANCE

5

S

20

8

123

Investments of Specified Trust Accounts In Public Debt Securities and Agency Securities
by Issue, as of Sept. 30, 1988
[In

Investment securities

millions o( dollafs]

124

MAJOR TRUST FUNDS
TOTAL NET INCREASE (DECREASE) IN INVESTMENTS
FY

1986-1988
"1

LEGEND
1

8

2

6

TRUST FUND
FEDERAL HOSPITAL INSURANCE
TRUST FUND
FEDERAL OLD-AGE AND SURVIVORS
INSURANCE TRUST FUND
FEDERAL SUPPLEMENTARY
MEDICAL INSURANCE TRUST FUND
NATIONAL SERVICE LIFE INSURANCE

7
8

FUND
RAILROAD RETIREMENT ACCOUNT
UNEMPLOYMENT TRUST FUND

3

7

4

6

5

5

CIVIL SERVICE RETIREMENT AND
DISABILITY FUND
FEDERAL DISABILITY INSURANCE

^^m

.

5
10
15
20
25
BILLIONS OF DOLLARS

5-.

U.S.

CURRENCY AND COIN OUTSTANDING

AND IN CIRCULATION

126
U.S.

CURRENCY AND COIN OUTSTANDING AND

IN

CIRCULATION

INTRODUCTION
Purpose and Scope

Deflnition of

The U.S. Currency and Coin Outstanding and In
Is prepared to inform the public of the face value of currency and coin which are used as a medium of exchange and the
total thereof, as of the end of a given accounting month.
Circulation

Statement

The statement defines the total amount of currency and coin
outstanding and the portion of which is deemed to be in circulation.
Although it still includes some old and current rare issues of coin and
currency which do not circulate or may do so to a limited extent,
Treasury policy is to continue their inclusion in the statement since
such issues were originally Intended for general circulation. The
statement also provides a brief description of the various issues of
U.S. paper money and further presents a comparative amount of

money

circulated

in

Terms

The
"Amounts outstanding and in circulation"
all issues by the Bureau of the Mint which are purposely
intended as a medium of exchange. Therefore, coins sold by the
Bureau of the Mint at premium prices are excluded However, uncirculated coin sets, sold by the Mint at face value plus a handling
charge, are included.
classification

includes

The term "Federal Reserve notes" refers to issues by the U.S.
Government to the public through the Federal Reserve banks and
their member banks
These notes represent US. Government
obligations. Currently, the item "Federal Reserve notes-amounts
outstanding" consists of new series issues. The Federal Reserve
note

is

the only class of currency currently issued.

relation to population.

"U.S. notes" are also known as legal tender notes and were
issued in five different Issues; namely, (a) First lssue-1862 ($5 to

History

Statements of currency and coin outstanding and in circulation
have been published by the Department of the Treasury since 1888.
These statements were originally prepared monthly by the Division
of Loans and Currency, which was then under the Office of the Secretary of the Treasury but later

became

part of the Public

Debt Serv-

known as the Bureau of the Public Debt) in 1929. The
statement was published with the title "Circulation Statement of
United States Money" from 1923 through December 31, 1965. Concurrently, from December 31, 1919, to September 30, 1951, the
Office of the U.S. Treasurer published a statement entitled "Monthly
Statement -Paper Currency of Each Denomination Outstanding."
Two months after the Office of the U.S. Treasurer assumed publication of the "Circulation Statement of United States Money," a revision
was made to the statement to include denomination detail of the
currency in circulation. Publication of the "Monthly Statement-Paper
Currency of Each Denomination Outstanding" was discontinued, and
the revised version which combines information from both statements became known as the United States Currency and Coin Outstanding and in Circulation Statement. The statement in 1983
ceased to be published as a separate, monthly release and instead
was incorporated into the quarterly Treasury Bulletin as a special
ice (currently

report.

$1,000 notes), (b) Second lssue-1862 ($1 to $2 notes), (c) Third
lssue-1863 ($5 to $1,000 notes), (d) Fourth lssue-1863 ($1 to
$10,000 notes), and (e) Fifth lssue-1901 ($10 notes).

The column for "Currency no longer issued" consists of gold
and new series), silver certificates (old and new
Reserve notes (old and new series), national bank
notes (old and new series), and Treasury notes (1890 series).

certificates (old

series). Federal

"Dollar coins" include standard silver coins

and nonsilver

coins.

"Fractional coins" include subsidiary coins in denominations of
50 cents, 25 cents, and 10 cents and minor coins (5 cents and 1
cent).

Reporting Sources

Data used in the preparation of the U.S. Currency and Coin
Outstanding and in Circulation Statement is derived from monthly
reports required from Treasury offices, various US Mint offices, the
Federal Reserve banks, and the Federal Reserve Board. Such reports convey information about the amount, class, and denomination
of new issues of currency and/or coin, of destroyed and replaced
currency, and of currency and coins withdrawn from circulation. Estimates of population from the Bureau of the Census are used in the
calculation of money circulated per capita.

1

127
U.S. Currency

and Coin Outstanding and
[Source: Financial

ManagemenI

in Circulation

Servica]

AMOUNTS OUTSTANDING AND IN CIRCULATION
Sept.

30.1988

Currency
Total

currency and

Currency no

Dollars

'

longer issued

Amounls outstanding
Less amounts held by:
The Treasury
The Federal Reserve banks
Amounts

in circulation

$284,295,559,316

$266,261,340,418

$265,670,510,846

$322,539,016

$268,290,556

$18,034,218,898

$2,024,703,898

$16,009,515,000

408.537.227
48.391.770.673

35.512.235
47.994.745.596

3.882.841

31.400.939

47.994.712.259

213

228.455
33.124

373.024.992
397.025.077

337.521.313
122.705.259

35.503.679
274.319.818

235,495.251.416

218.231.082.587

217.671.915.746

291.137.864

268.028.977

17.264.168.829

1.564.477.326

15,699.691.503

CURRENCY

IN

CIRCULATION BY DENOMINATION

Sept. 30. 1988

Federal

Currency
no longer

Reserve
notes

$1

$4.275.453.81
767.153.134
5.438.863.670
1 1.670.878.120
60.281.450.900
28.753.570.350
106.712.669.500
150.852.500
174.950.000
1.790.000
3,450,000

$2
$5
$10
$20
$50
$100
$500
$1.000
$5.000
$10.000
Fractional
Partial

paOs

notes °

Total currency

487
115
218,231,082,587

$4,123,452,309
634,;
,278.602
5.289,,698.885
11.646,,355.400

60.261,,275.400
28.741,,981.250
106.644,,373.900
150.e
,663.000
174.';742.000

745.000

1.'

,350.000

issued

$143,481
132.861.558
112.027.405
5.950
3.380

$151,858,021
12.974
37.137.380
24.516.770
20.172.120
11.589.100
22.199.600
189.500
208.000
45.000
100.000

487
25

$235,495.3
Aug. 31.
July 31.
June 30.

May 31.
Sept. 30.
Sept. 30.
Sept. 30.
une 30.
une30.
une 30.
une 30,

1975
1970
1965
1960
1955
1950

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