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US budget deficit nears 1 trillion dlrs: Treasury

The US budget deficit accelerated in March to hit a record nearly one trillion dollars in the first half of the current fiscal year as the government moved to bail out troubled institutions, government data showed Friday.

The deficit for the first six months of the fiscal year which began on October 1 was 956.80 billion dollars, said the Treasury's monthly statement of receipts and outlays.

Receipts during the six-month period to March 2009 were 989.83 billion dollars while outlays amounted to nearly 1.95 trillion dollars, the data showed.

The March deficit of 192.27 billion dollars was higher than the 160 billion dollars expected by most analysts, coming on the back of money poured by President Barack Obama's administration to rescue financial institutions.

All six months of the fiscal year so far recorded red ink. The last time the United States plunged into a consecutive six month deficit was during the October 2003-March 2004 period, officials said.

The non-partisan Congressional Budget Office (CBO) forecast last month the budget deficit could hit 1.845 trillion dollars for the whole year based on Obama's 3.5-trillion-dollar budget plan approved by Congress early this month.

The CBO said its budget deficit estimate for fiscal 2009, which ends on September 30, would be four times the 2008 record shortfall and amount to 13.1 percent of the country's total economic output.

The Obama budget forecasts a 1.750 trillion dollar deficit in fiscal 2009, but foresees that figure falling to 1.171 trillion dollars in 2010.

The plan sees the deficit soaring to the largest percentage of gross domestic product since World War II, but the president touted a string of cost savings designed to lay new foundations for the US economy.

It also includes an optimistic forecast that the struggling US economy will post robust growth next year, projecting a 1.2 percent contraction in calendar 2009 but an expansion of 3.2 percent in 2010.

The president's plan includes investment in renewable energy, education, health care reform and is targeted to cut the deficit in half by the end of his current term in 2013.

The Treasury data Friday showed the administration used 293 billion dollars under the Troubled Asset Relief Program (TARP) to keep financial institutions afloat while another 60 billion dollars was injected into ailing mortgage finance giants Fannie Mae and Freddie Mac.

Nearly 120 billion dollars was also spent by the Treasury to purchase home mortgage securities, the data showed.

A US home mortgage meltdown triggered financial turmoil stemming from soured mortgage based securities that led to the collapse last year of financial institutions, including US investment banking icon Lehman Brothers, and slammed the brakes on growth.

The economy plunged into recession in December 2007.

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Publication:AFP Global Edition
Date:Apr 10, 2009
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