Markets Wired

As Prepared for Delivery

Let me thank the IMF and the World Bank for hosting these meetings and all of you for attending today.

I’d like to start by stepping back and speaking about how far we’ve come. Three years ago when I attended my first Annual Meetings as Treasury Secretary, the COVID-19 pandemic was raging. Many of the events were virtual. The IMF had just revised downward its projections for global economic growth due to continued supply chain disruptions and new COVID variants.

Today, the situation is very different. Though progress across economies has been uneven, the global economy has proven resilient. America’s strong economic performance is leading the way as a key engine of global growth. At home, thanks to the Biden-Harris Administration’s economic agenda, we went from millions having lost their jobs to a historic labor market recovery. Unemployment is near all-time lows and U.S. real wage growth has outperformed that of most other advanced economies. U.S. economic growth has also been almost twice as fast as most other advanced economies this year and last, even as inflation came down sooner. As a recent Brookings analysis puts it, “the U.S. is significantly outperforming its peers.” We’re now working to sustain this momentum, including through major investments in infrastructure, advanced manufacturing, and clean energy that other countries have sought to emulate. This morning the IMF again upgraded its forecast for the U.S. outlook, as it did in 2023, when U.S. growth ultimately came in at almost double the IMF’s projection earlier that year.

Our Administration has also been focused beyond our borders. From day one, we rejected isolationism that made America and the world worse off and pursued global economic leadership that supports economies around the world and brings significant benefits to the American people and the U.S. economy.

We will further this approach this week, including by together continuing to respond to global conflicts. For more than two years, the coalition we formed in the immediate aftermath of Russia’s invasion of Ukraine has stood strong. Our novel price cap on Russian oil has restricted Russia’s revenues while keeping global energy markets well-supplied. We continue cracking down on Russian sanctions evasion, and as soon as next week we will unveil strong new sanctions targeting those facilitating the Kremlin’s war machine, including intermediaries in third countries that are supplying Russia with critical inputs for its military. We have also been working tirelessly to unlock the economic value of the Russian sovereign assets immobilized in our jurisdictions to support Ukraine.

The United States is also using all the tools at our disposal in response to the conflict in the Middle East. We have worked to hold the Iranian regime accountable for its destructive behavior across the region by sanctioning terrorist actors including Hamas, the Houthis, and Hezbollah, with over 1,000 Iran-related sanctions since 2021 and multiple rounds of designations in recent weeks. Earlier this month, we took additional decisive action to intensify pressure on Iran in response to Iran’s attack on Israel, expanding sanctions to target Iran’s efforts to channel revenues from its energy industry to finance deadly activities.

And we are more broadly focused on doing what we can to increase stability in the region, including by working to ensure that legitimate aid flows reach Gaza, imposing sanctions on Israeli violent extremist settlers, and pressing Israel to maintain vital correspondent banking relationships with Palestinian banks. We look forward to the Israeli cabinet extending the waivers to preserve correspondent banking relationships for banks in the West Bank by the end of the month deadline to support economic stability in the West Bank.

This week, we’ll maintain our focus not only on taking decisive action in response to conflicts, but also on addressing challenges that threaten to hold back global growth, such as emerging markets and developing countries facing significant debt vulnerabilities and a desperate need for investments in infrastructure and clean energy.

One of many devastating impacts of Russia’s war on Ukraine has been the spike in food insecurity, so we worked with partners to support the launch of the International Financial Institution Action Plan to Address Food Insecurity and have seen it deliver results. IFIs increased lending to the food and agriculture sector by 60 percent following Russia’s invasion and maintained that level of support through 2023. We now affirm President Banga’s commitment to reduce hunger and generate jobs by increasing investment in food systems and will continue to work with the IFIs to move this work forward.

To strengthen health systems, as the current mpox outbreak underscores remains urgent, we continue to support the Pandemic Fund, which has now allocated funding to projects in more than 40 countries across all regions.

Confronting climate change of course also remains at the top of our agenda. The MDBs committed a record high of nearly $75 billion in climate finance to low- and middle-income countries in 2023, a 45 percent increase from 2021, and are deploying new tools to help countries respond to crises and increase resilience. We will continue to work to make climate finance easier to access and to support additional private capital mobilization at the MDBs and through the climate and environment trust funds. There, we should turn to implementing the recommendations of the recently finalized review of the climate finance architecture that we worked with G20 partners to launch.

And we’ve made significant progress putting conflict and fragility, pandemics, and climate change at the core of the MDBs’ work through the Evolution agenda. The MDBs have responsibly stretched their balance sheets and pursued innovative financial measures that will enable $200 billion in additional lending capacity over the next ten years. And as of July, the G20 estimates that measures that have already been identified could enable an additional almost $160 billion. This nearly $360 billion in total would be an annual increase of over 20 percent compared to 2023.

Let me end by emphasizing that all of the investments we make—in food security, global health, climate, and more—won’t deliver results if many low- and middle-income countries are devoting more resources to debt service than to spending on development priorities. We’ve made progress to strengthen our institutions to address these issues. We reached a historic agreement on a 16th General Review of Quotas at the IMF, which will increase IMF quotas by 50 percent so that it can continue playing its crucial role at the center of the global safety net, and approved capital increases at the EBRD and IDB Invest.

But we need to do more. As we look ahead, our Administration will keep pushing to further improve the Common Framework to quickly get support to countries in debt distress; calling for an IDA replenishment with a financing package and policy priorities that meet the needs of low-income countries; and implementing the Nairobi-Washington Vision that President Biden and President Ruto launched in May so that countries with strong policy frameworks facing liquidity stress receive the financing support they need to realize their sustainable development ambitions.

Many of the challenges we face cannot be solved overnight. But I am convinced that the sustained American economic leadership and engagement with partners we first restored and then strengthened over the past three and a half years will be indispensable as we move forward. I look forward to furthering this approach this week as we celebrate the 80th anniversary of the Bretton Woods institutions.

Thank you, and I will now take your questions.

###

As Prepared for Delivery 

Two years ago on the eve of the Annual Meetings, I called for the evolution of the multilateral development banks. Today, I am glad to be here with President Banga, Lord Malloch-Brown, and Minister Musokotwane to lay out what we’ve achieved and to reaffirm our commitment to sustaining momentum.

I called for evolution because, as we began to exit COVID recessions around the world, I and many others saw that the stakes were high. There had been insufficient progress or troubling reversals on many of the Sustainable Development Goals. And we faced urgent global challenges that could quickly unravel hard-earned development gains and diminish prospects for the future: from climate change, to pandemics and other global health emergencies, to fragility, conflict, and violence.

I also had a strong conviction about the vital role that the MDBs could play at this crucial moment. Over decades, they have responded to their shareholders; built trusted relationships with developing country governments; and developed and deployed a wide range of tools, from financing to policy support to technical assistance. I’ve gotten to see their impact firsthand in my travels as Treasury Secretary, from an education data processing center in India recognized for driving improvements in educational outcomes that I visited with President Banga to a cutting-edge university in Morocco where I marked the one-year anniversary of MDB Evolution during last year’s Annual Meetings. 

I saw, too, however, that the MDBs needed to change to meet the nature, urgency, and scale of today’s challenges. They could focus more on global public goods because achieving development outcomes at the country level is inextricably linked to addressing global challenges. They could better utilize their balance sheets and harness private sector resources. They could act faster and work more as a system.

My call resonated widely because despite a range of perspectives on what exactly was needed, there was overwhelming consensus on the need for change. Very quickly, diverse stakeholders stepped up. President Banga and leaders across the MDB system led. Governments, non-governmental organizations, research institutions, and the private sector became involved, helping shape Evolution and then continuing to support it. Successive G20 presidencies kept MDB reform high on the agenda. Staff across the MDBs bought in and started taking forward the hard work of implementation.

We focused the Evolution agenda on four key areas in need of change: mission, incentives, operational models, and financial capacity. We’ve seen progress in each. The World Bank has a new vision and mission—“To create a world free of poverty on a livable planet”—and regional development banks have shifted missions as well. There are new incentives like updated corporate scorecards that focus the banks on outcomes, impact, and mobilizing private capital. World Bank projects are moving more quickly to approval, and IDB Invest has a new originate-to-share model to bring in private sector investors. We’ve also drastically increased financial capacity. Across the MDBs, responsibly stretching balance sheets and innovative measures will enable $200 billion in new lending capacity over the next decade, with a potential additional nearly $160 billion from other already identified measures. 

Let me provide some examples of what these changes actually mean for countries around the world.

Nineteen countries have adopted a new option that allows them to repurpose World Bank funds for emergency response so that they can better support their citizens in times of crisis. For example, they could shift resources for a long-term infrastructure project to rebuild critical infrastructure after a natural disaster.

Other countries are taking advantage of innovative tools like climate resilient debt clauses. In July, St. Vincent and the Grenadines chose to delay its repayments to the World Bank for two years, freeing up funds to support disaster response when it mattered most.

Making good on lessons learned from the COVID-19 pandemic, improved communication and coordination across the MDBs and with other institutions will enable faster and more effective responses to global health crises. The World Bank is working with the World Health Organization and the G20 Joint Finance Health Task Force to track financing commitments to mpox response so that resources can be connected to needs. And the Bank, the IMF, and the WHO have just announced how they will jointly help countries access Resilience and Sustainability Trust resources to close pandemic preparedness gaps.

Outside of crisis contexts, countries are increasingly addressing the underlying drivers of fragility and conflict, such as in the case of an African Development Bank loan to the Democratic Republic of Congo to invest in increasing agricultural productivity in communities that had been displaced.

Efforts to drive private capital mobilization are also starting to yield results. New data from the Global Emerging Markets Risk Database enabled an investment fund focused on the SDGs and climate finance to attract over $1 billion in financing, including from a major Dutch pension fund. The World Bank’s push to mitigate foreign exchange risk through more local currency lending is leading to projects like a $200 million financing package for a telecommunications company in Senegal that will help increase digital connectivity. And the Asian Development Bank’s placement of more private sector-focused staff in country offices will facilitate identifying new opportunities for private sector engagement.

Taking inspiration from these and many other examples, we will keep moving Evolution forward this week and in the coming months. The SDGs challenge us to eradicate extreme poverty, strengthen health systems, and protect the planet. President Banga has set ambitious goals, such as to work with the African Development Bank to bring electricity to 300 million people in Sub-Saharan Africa by 2030.

To meet these goals and deliver enduring change, we need to double down on implementation. This includes strengthening partnerships in the context of fragility, conflict, and violence and embedding new ways of working to achieve climate outcomes and increase pandemic preparedness. We must also maintain focus on increasing private capital mobilization and using capital as efficiently as possible.

The work ahead isn’t just for the MDBs to undertake. Shareholders must also play active roles. This is why the United States strongly supported capital increases for the EBRD and IDB Invest, a callable capital increase for the AfDB, and the largest-ever replenishment of the Asian Development Fund. It is also why we now intend to do all we can to deliver a robust policy and financial package for the upcoming IDA replenishment.

We cannot turn back. Eighty years ago at Bretton Woods we created institutions that have shaped development outcomes around the world. Today, the MDBs are the best option for high-quality and transparent development financing at the scale we so desperately need. But the world has changed, and it’s incumbent on each generation to make sure these institutions change with it.

I’ve been honored to be part of delivering on that charge over the past two years. And I believe that the work we’ve done and will continue to do will endure long after I and those here leave our current roles—through better, bigger, and more effective institutions that meet today’s most pressing challenges and pave the way for better outcomes for decades to come.

Thank you.

###

U.S. Endorses “Call to Action” on Shadow Fleet  

WASHINGTON – Today, the Price Cap Coalition, which includes G7 countries as well as the European Union, Australia, and New Zealand, is updating its advisory for both government and private sector actors involved in the global maritime industry. The advisory provides recommendations concerning specific best practices and reflects the Coalition’s ongoing commitment to promoting responsible practices in the industry, disrupting sanctioned trade, and enhancing compliance with the price cap. 

The Coalition originally published its advisory on October 12, 2023. Today’s update provides stakeholders with new recommendations on meeting international obligations, enhancing due diligence around tanker sales, avoiding interactions with sanctioned counterparties, and raising internal awareness. 

The Coalition remains focused on reducing the revenues Russia uses to fuel its brutal war against Ukraine while maintaining energy market stability. 

Call to Action on Risks of the shadow Fleet 

Separately, the United States is endorsing the United Kingdom-led “Call to Action,” which was issued in July 2024 and has been endorsed by a number of our partners. It sets out the risks generated by Russia’s shadow fleet and provides a basis to develop a coordinated response to those risks. The United States is committed to increasing the costs to Russia of using this shadow fleet to evade sanctions. 

### 

WASHINGTON – Today, U.S. Deputy Secretary of the Treasury Wally Adeyemo spoke with Palestinian Authority Prime Minister Mohammad Mustafa. They discussed security and economic stability in the West Bank as well as the Palestinian Authority’s efforts to improve its anti-money laundering and countering the financing of terrorism (AML/CFT) regime. Deputy Secretary Adeyemo stressed the importance of preventing terrorists and violent extremists from raising, using, and moving funds in the West Bank. He noted the Palestinian Authority’s progress on strengthening its CFT regime to further support these relationships, including by completing key milestones related to the assessment of AML/CFT risks within its jurisdiction and bolstering effective compliance with international standards.

Deputy Secretary Adeyemo commended the Palestinian Authority for completing a risk assessment of their financial system, as well as scheduling a MENAFATF evaluation of their banking system. These are both critical steps for ensuring financial linkages between the Palestinian territories and the international financial system continue. They discussed the importance of the correspondent banking relationships between Israeli and Palestinian banks to the security and economic stability of the region.

###

WASHINGTON – U.S. Secretary of the Treasury Janet L. Yellen and Office of Management and Budget (OMB) Director Shalanda D. Young today released the final budget results for fiscal year (FY) 2024. 

Under the leadership of President Biden and Vice President Harris, our economy has created over 16 million jobs, unemployment remains the lowest on average of any Administration in 50 years, and workers’ income have increased by nearly $4,000, after adjusting for inflation. As a result of this leadership, we’ve achieved a recovery few thought possible with inflation back down close to pre-pandemic levels and the economy remaining strong. But there’s more to do to lower costs and create opportunities for hardworking Americans. The President and Vice President are fighting to grow the middle class, including by lowering housing, energy, child care, health care, and prescription drug costs; lowering taxes for the middle class and working people while making billionaires and big corporations pay their fair share; and investing in small businesses. 

The Biden-Harris Administration has delivered this progress with a commitment to fiscal responsibility—including by lowering the deficit $1.3 trillion since taking office. In addition, the President has also signed into law another roughly $1 trillion in deficit reduction over the next decade through the Fiscal Responsibility Act of 2023, and through Inflation Reduction Act provisions that empower Medicare to negotiate lower prescription drug prices and make our tax system fairer by making billion-dollar corporations pay a minimum tax and enabling the Internal Revenue Service to crack down on wealthy tax cheats.

“The U.S. economy continued to demonstrate its strength and resilience in 2024, with inflation having fallen more than two thirds from its peak while the labor market remains strong. Anchored by strong household consumption and strong business investment, GDP growth has remained healthy even as inflation normalizes,” said Secretary of the Treasury Janet L. Yellen. “The Biden-Harris Administration remains focused on our economy’s long-term growth, which includes sustaining historic investments in infrastructure, advanced manufacturing, and clean energy while also addressing our long-term fiscal outlook. The Budget put forward by President Biden reduces the deficit by $3 trillion by asking corporations and the wealthiest Americans to pay their fair share, while preserving our important investments in our country’s future.”

“Over the past three and a half years, the Biden-Harris Administration has overseen a strong economic recovery, amassed one of the most successful legislative records in generations, grown the economy from the middle out and bottom up, lowered the deficit, and delivered important progress to lower costs for the American people on behalf of the American people,” said Shalanda Young, Director of the Office of Management and Budget. “This Administration has done this while maintaining a commitment to fiscal responsibility by ensuring the wealthiest among us and large corporations pay their fair share and cutting wasteful spending on special interests. We will build on this progress to make sure the middle class has a fair shot and we leave no one behind.”

Summary of Fiscal Year 2024 Budget Results

Year-end data from the September 2024 Monthly Treasury Statement of Receipts and Outlays of the United States Government show that the deficit for FY 2024 was $1.8 trillion; $138 billion higher than the prior year’s deficit. As a percentage of GDP, the deficit was 6.4 percent, an increase from 6.2 percent in FY 2023.  The 2024 deficit is $196 billion lower than in 2023, excluding the effect of the Supreme Court’s 2023 decision Biden v. Nebraska regarding certain student loan programs. 

The FY 2024 deficit was $76 billion lower than the baseline estimate of $1.91 trillion in the 2024 Budget published in March, and $144 billion lower than the baseline estimate of $1.98 trillion in the Mid-Session Review (MSR), a supplemental update to the Budget published in July. Differences were smaller when compared to estimates incorporating enactment of the President’s proposed policies: $27 billion and $41 billion lower than estimates, respectively.     

 

Table 1. Total Receipts, Outlays, and Deficit (in trillions of dollars)

	Receipts	Outlays	Deficit
FY 2023 Actual	4.439	6.135	1.695
Percentage of GDP	16.2%	22.5%	6.2%
Actuals adjusted to exclude student loan modification	4.439	6.468	2.029
Percentage of GDP	16.2%	23.7%	7.4%
FY 2024 Actual	4.919	6.752	1.833
Percentage of GDP	17.1%	23.4%	6.4%
FY 2024 Estimates:
2025 Budget
Baseline	4.964	6.873	1.909
Policy	5.082	6.941	1.859
2025 Mid-Session Review
Baseline	4.885	6.861	1.977
Policy	5.001	6.875	1.874
Note: Detail may not add to totals due to rounding.

Governmental receipts totaled $4.9 trillion in FY 2024 (17.1 percent of GDP), slightly lower than Budget baseline estimates but higher than MSR baseline estimates. Relative to FY 2023, receipts increased by $479 billion, an increase of 10.8 percent. The increase in receipts for FY 2024 compared to FY 2023 is primarily attributable to increases in individual income taxes of $250 billion (11 percent), corporation income taxes of $110 billion (26 percent), and social insurance and retirement receipts of $95 billion (6 percent). While receipts rose compared to FY 2023, they remain below historical averages as a share of GDP. 

Outlays were $6.8 trillion in FY 2024, $121 billion less than projected in the Budget baseline and $109 billion less than projected in the MSR. Compared with FY 2023, outlays increased $617 billion, or 10.1 percent. As a share of GDP, outlays rose from 22.5 percent to 23.4 percent. This increase from FY 2023 in part reflects the effects of the Supreme Court’s 2023 decision in Biden v. Nebraska regarding certain student loan programs. Removing the effects of student debt forgiveness in 2023, large changes included a $254 billion (29%) increase in spending on Interest on the Public Debt, largely due to higher interest rates. Other increases included $103 billion (7%) in Social Security spending, a $50 billion (6%) increase in Defense spending, and a $28 billion (3%) increase in Medicare gross outlays. These increases were partially offset by spending decreases in the Federal Deposit Insurance Corporation (FDIC) of $55 billion (a 60% decrease), the Pension Benefit Guaranty Fund of $28 billion (a 70% decrease), and the Supplemental Nutrition Assistance Program (SNAP) of $28 billion (a 21% decrease).

Total Federal borrowing from the public increased by $2.0 trillion during FY 2024 to $28.2 trillion. The increase in borrowing included $1.8 trillion in borrowing to finance the deficit as well as $0.1 trillion in net borrowing related to other transactions such as changes in cash balances and net disbursements for Federal credit programs. As a percentage of GDP, borrowing from the public grew from 96 percent of GDP at the end of FY 2023 to 98 percent of GDP at the end of FY 2024.

To coincide with the release of the Federal Government’s year-end financial data, Treasury’s Bureau of the Fiscal Service (Fiscal Service) is continuing to publish Your Guide to America’s Finances (Your Guide). The Fiscal Service created Your Guide in 2019 to make Federal financial information transparent and accessible to all Americans. The latest version offers easy-to-understand explainer pages and makes content more accessible on mobile devices. The data in Your Guide is automatically updated throughout the year as new data becomes available, ensuring that the public has access to the latest financial information as quickly as possible. 

Below are explanations of the differences between FY 2024 estimates and the year-end actual amounts for receipts by source and outlays by agency.

Fiscal Year 2024 Receipts

Total receipts for FY 2024 were $4,918.7 billion, $82.4 billion lower than the MSR estimate of $5,001.1 billion. This net decrease in receipts was the net effect of lower-than-estimated collections of corporation income taxes, social insurance and retirement receipts, and estate and gift taxes. Table 2 displays actual receipts and estimates from the MSR by source.

• Individual income taxes were $2,426.1 billion, $8.7 billion higher than the MSR estimate. The MSR estimates included a net $6.0 billion decrease in receipts from legislative proposals to increase the top marginal income tax rate for high-income earners, close Medicare tax loopholes and increase the Medicare tax for people making over $400,000, improve Medicare solvency, and expand the child credit and make it permanently advanceable and refundable, all of which remain unenacted as of the publication of this document. Excluding the effects of legislative proposals, individual income taxes were $2.7 billion higher than the MSR estimate. This difference was the net effect of higher withheld payments of individual income tax liability of $5.7 billion, higher non-withheld payments of $5.6 billion, and higher-than-estimated refunds of $8.6 billion. Relative to 2023, individual income tax receipts rose by $249.6 billion, partially resulting from the shifts in payment deadlines for some taxpayers, including those impacted by natural disasters.
• Corporation income taxes were $529.9 billion, $79.6 billion below the MSR estimate. The MSR estimates included $94.9 billion in receipts from legislative proposals to raise the corporate income tax rate to 28 percent, and revise the global minimum tax regime, limit inversions, and make related reforms, which remain unenacted as of the publication of this document. Excluding the effects of legislative proposals, corporation income taxes were $15.2 billion above the MSR estimate. This difference was largely due to lower-than-estimated refunds of $4.1 billion. Relative to 2023, corporation income tax receipts rose by $110.3 billion, the net effect of lower refunds and higher gross receipts, partially resulting from the shifts in payment deadlines for some corporate taxpayers, including those impacted by natural disasters.
• Social insurance and retirement receipts were $1,709.6 billion, $27.1 billion lower than the MSR estimate. The MSR estimates included $27.7 billion in receipts from legislative proposals to increase the net investment income tax rate and additional Medicare tax rate for high-income taxpayers, which remain unenacted as of the publication of this document. Excluding the effects of legislative proposals, social insurance and retirement receipts were $0.6 billion below the MSR estimate. Relative to 2023, social insurance and retirement receipts increased by $95.1 billion.
• Excise taxes were $101.4 billion, $12.2 billion above the MSR estimate. Relative to 2023, excise tax collections increased by $25.6 billion.
• Estate and gift taxes were $31.6 billion, $0.9 billion below the MSR estimate. Relative to 2023, estate and gift taxes decreased by $2.1 billion.
• Customs duties were $77.0 billion, $0.2 billion above the MSR estimate. Relative to 2023, customs duties decreased by $3.3 billion.
• Miscellaneous receipts were $43.2 billion, $4.1 billion above the MSR estimate. This included a $2.8 billion increase in collections of various fees, penalties, forfeitures, and fines, and a $1.4 billion increase in deposits of earnings by the Federal Reserve System.  Relative to 2023, deposits of earnings by the Federal Reserve rose by $2.6 billion. Other miscellaneous receipts increased by $1.6 billion.

Fiscal Year 2024 Outlays

Total outlays were $6,751.6 billion for FY 2024, $123.1 billion below the MSR estimate. Table 3 displays actual outlays by agency and major program as well as estimates from the Budget and the MSR. The largest changes in outlays from the MSR were in the following areas: 

Department of Agriculture — Outlays for the Department of Agriculture were $203.4 billion, $33.7 billion lower than the MSR estimate. SNAP outlays in FY 2024 were $13.9 billion below MSR estimates. This is due to lower-than-projected outlays for SNAP benefits and prior year outlays for Pandemic EBT (P-EBT) benefits. Outlays in the Child Nutrition Programs were $32.7 billion, $4.9 billion lower than MSR estimates. This stems from lower participation rates across three programs: National School Lunch Program, National School Breakfast Program, and Child and Adult Care Food Programs and expectations that a portion of outlays from the new Summer EBT program will outlay in FY 2025. Outlays for the Commodity Credit Corporation (CCC) were $5.4 billion lower than MSR estimates. This is in part due to $2.1 billion in borrowing authority for administrative activities being executed in FY 2025 (October 2024), rather than FY 2024. Additionally, actual market conditions led to lower outlays for Marketing Assistance Loans, Dairy Margin Coverage, and CCC-funded disaster programs. In addition, outlays for the Crop Insurance Program were $4.9 billion lower than MSR estimates primarily due to the majority of 2024 spring crop producer premiums being received when due at the end of fiscal year 2024, instead of the first quarter of fiscal year 2025 because Risk Management Agency did not offer a late premium payment penalty waiver.

Department of Commerce — Outlays for the Department of Commerce were $14.8 billion, $5.3 billion lower than the MSR estimate. The National Institute of Standards and Technology (NIST) outlays were $1.8 billion less than MSR. Of this total, $0.9 billion is attributable to lower-than-expected outlays for the Creating Helpful Incentives to Produce Semiconductors (CHIPS) program, and $0.8 billion is due to lower than expected outlays in NIST’s R&D, manufacturing, and construction programs. The National Telecommunications and Information Administration outlays were $2.3 billion lower than MSR due to slower-than-expected finalization of awards and projects in the Broadband Equity, Access, and Deployment Program ($1.5 billion) and Middle Mile Deployment program ($0.4 billion). Outlays for the National Oceanic and Atmospheric Administration and the Bureau of the Census were also $0.6 billion and $0.4 billion less than MSR, respectively.

Department of Defense — Outlays for the Department of Defense were $826.3 billion, $8.5 billion higher than the MSR estimate.  This difference is mostly due to higher-than-expected outlays for activities such as operation and maintenance contracts ($1.8 billion), as well as Air Force procurement ($3.9 billion) and Air Force research, development, test and evaluation activities ($4.0 billion). 

Other Defense Civil Programs — Outlays for the Other Defense Civil Programs were $66.2 billion, $3.0 billion lower than the MSR estimate. This difference is primarily due to $4.3 billion lower-than-expected outlays in the Military Retirement Fund (MRF).  Lower MRF outlays were partially offset by lower-than-expected earnings in the Medicare Eligible Retiree Health Care Fund ($1.2 billion).

Department of Education — Outlays for the Department of Education were $268.4 billion, $10.7 billion higher than the MSR estimate. Outlays in the Federal Direct Student Loan Program Account were $2.6 billion higher than the MSR estimate because of higher than projected consolidation loan volume and a modification concerning collections on defaulted loans. Outlays in the Federal Family Education Loan Program were $1.3 billion higher than the MSR estimate due to a modification concerning collections on defaulted loans and Voluntary Flexible Agreements.  Outlays in the Student Financial Assistance Account were $2.5 billion higher than MSR due to actual disbursements in the Pell Grant program being higher than predicted. Outlays in the Education Stabilization Fund account were $1.6 billion higher than the MSR estimate primarily from higher-than-anticipated spending in the American Rescue Plan Act of 2021 (ARP) programs related to the closing of the period of funding availability.

Corps of Engineers — Outlays for the Corps of Engineers were $11.3 billion, $3.4 billion higher than the MSR estimate. The difference is predominantly due to higher-than-anticipated construction contract awards and higher than anticipated outlays from the Harbor Maintenance Trust Fund.

Federal Deposit Insurance Corporation — Net outlays for the Federal Deposit Insurance Corporation were $37.1 billion, $8.6 billion lower than the MSR estimate. This was primarily due to higher-than-anticipated recoveries from failed banks, along with $0.7 billion lower outlays than projected at MSR for the Orderly Liquidation Fund as its underlying authority was unused.

Department of Health and Human Services — Outlays for the Department of Health and Human Services were $1,721 billion, $6.8 billion lower than the MSR estimate. Gross outlays for Medicare’s Hospital Insurance (HI) trust fund were $3.8 billion higher than projected due to slight variations in inpatient hospital and Medicare Advantage (MA) spending that totaled less than one percent of Medicare HI spending. Gross outlays for Medicare’s Supplementary Medical Insurance (SMI) trust fund were $8 billion higher than projected due to increased MA, skin substitute, and COVID-19 vaccine spending. Prior to the end of the COVID-19 Public Health Emergency (PHE), traditional Medicare only covered COVID-19 vaccine administration, as government stock of vaccines was used. After the PHE, traditional Medicare coverage includes both the vaccine and administration. Part B aged premiums collections were $2.7 billion less than estimated due to any combination of variation in enrollment, late enrollment penalties collected, and income-based additional premiums collected. Outlays to the Payments to the Health Care Trust Funds (PTF) were $2.2 billion higher than estimated due to indefinite authority being invoked after MSR for making SMI matching payments and Part D benefit payments. Actual outlays for cost-sharing reductions were $13.4 billion lower than projected in MSR due to the absence of an appropriations for Cost-Sharing Reductions. Actual outlays for the Public Health and Social Services Emergency Fund were $4.1 billion lower than projected in MSR due to lower-than-anticipated outlays of large contracts and grants funded with COVID-19 supplemental resources, in part due to extended periods of performance in the contracts.

Department of Homeland Security — Outlays for the Department of Homeland Security were $89.3 billion, $32.7 billion lower than the MSR estimate. The difference is attributable to the Federal Emergency Management Agency (FEMA). First, Disaster Relief Fund outlays were $29.4 billion lower than MSR estimates because FEMA entered into Immediate Needs Funding, halting obligations for COVID-19 projects that otherwise would have outlaid quickly, and because FEMA did not properly account for the time required to liquidate obligations for long-term recovery projects. Additionally, FEMA did not revise down estimates for flood insurance claims during MSR, which resulted in approximately $2.9 billion of the difference, citing the historic hurricane season predicted by the National Hurricane Center that could have resulted in higher flood insurance claims impacting the National Flood Insurance Fund and the National Flood Insurance Reserve Fund. 

International Assistance Programs — Outlays for International Assistance Programs were $35.8 billion, $6.4 billion lower than the Budget estimate. This difference is largely due to $5.1 billion in lower than estimated outlays for Department of State and U.S. Agency for International Development economic and development assistance accounts, in part to account for the time required to meet congressional pre-obligation requirements. Outlay estimates for supplemental funds also differed, including disbursements of Direct Budget Support payments after the Government of Ukraine met the conditionality framework.  In addition, Foreign Military Sales outlays were $2.9 billion lower than expected due to higher-than-anticipated receipts received from foreign governments for weapons purchases as well as higher-than-expected outlays from sales.

Office of Personnel Management — Outlays for the Office of Personnel Management were $126.2 billion, $2.6 billion lower than the MSR estimate. The difference is primarily due to lower-than-projected outlays for the Civil Service Retirement and Disability Fund.

United States Postal Service — Outlays for the United States Postal Service were $4.0 billion, $2.7 billion higher than estimated at MSR primarily due to lower than estimated revenue and higher than expected costs, including for salaries and capital expenditures.

Railroad Retirement Board — Outlays for the Railroad Retirement Board were $5.4 billion, $2.6 billion lower than the MSR estimate. The difference was primarily attributable to higher-than-expected stock market gains on non-federal securities in the National Railroad Retirement Investment Trust (about $1 billion).

Department of the Treasury — Outlays for the Department of the Treasury were $1,316.9 billion, $30.5 billion lower than the MSR estimate. Interest on the public debt, which is paid to the public and to trust funds and other Government accounts, was $24.7 billion lower than the MSR estimate.  The difference was due primarily to lower-than-projected interest paid on inflation-protected Treasury securities held by the public and lower-than-projected interest paid to the debt held by Government accounts, particularly the Pension Benefit Guaranty Corporation.  Intragovernmental interest paid to Government accounts has no net impact on total Federal Government outlays. Net outlays for intragovernmental interest transactions with non-budgetary credit financing accounts were $4.6 billion higher than projected, including $7.9 billion in lower-than-projected receipts of interest from credit financing accounts, partly offset by $3.3 billion lower-than-anticipated interest paid to credit financing accounts. (Interest received from credit financing accounts is reported in Treasury’s aggregate offsetting receipts.)

Outlays for the Elective Payment for Energy Property and Electricity Produced were $8.8 billion lower than the MSR estimate, which had assumed that more eligible companies would file tax returns early enough to receive payments this year. Outlays for Coronavirus Tax Credits, which include Employee Retention Credits (ERC), were $3.8 billion lower than estimated at MSR because the Internal Revenue Service’s (IRS) temporary pause in ERC processing lasted longer than anticipated. These decreases were partly offset by outlays for the refundable premium tax credits that were $5.1 billion higher than projected due to typical variances resulting from the timing of individual income tax filings and other factors. Non-IRS pandemic response programs enacted in the Consolidated Appropriations Act, 2021, and the ARP, including the Emergency Rental Assistance program and the State and Local Fiscal Recovery Fund, accounted for $1.2 billion in lower-than-projected outlays due in large part to the return of unused program funds coming back to Treasury in the last quarter of the fiscal year. 

Undistributed Offsetting Receipts — Undistributed Offsetting Receipts were -$330.6 billion, $2.8 billion lower net collections than the MSR estimate.  For interest received by trust funds, net collections were $3.7 billion lower than the MSR estimate.  Of the $3.7 billion difference, $2.6 billion is due to lower-than-projected interest paid to the Military Retirement Fund and $0.6 billion is due to lower-than-projected interest paid to the Social Security Federal Old-Age and Survivors Insurance Trust Fund.  This intragovernmental interest is paid out of the Department of the Treasury account for interest on the public debt and has no net impact on total Federal Government outlays.

Department of Veterans Affairs — Outlays for the Department of Veterans Affairs (VA) were $325.0 billion, $16.1 billion lower than the MSR estimates. VA’s lower outlays were driven mostly by differences in Benefits Programs, which were $7.0 billion lower than the MSR estimate; Departmental Administration programs, which were $1.8 billion lower than the MSR estimate; Negative Housing Subsidies, which were $5 billion lower than the MSR estimate; and Veterans Health Administration (VHA), which was $2.8 billion lower than the MSR estimate.

Within Benefits Programs, Compensation & Pension (C&P) benefits were $5.4 billion lower than expected and Readjustment Benefits were $670 million lower than expected in part due to an overestimation of benefits payments at the time of MSR. Departmental Administration programs were lower than expected due to six accounts being $140 to $800 million lower than the MSR estimate, primarily driven by lower outlays for Information Technology Systems and the Toxic Exposures Fund. FY 2024 is only the second full fiscal year VA has utilized TEF funding, and VA continues to refine its estimates as additional execution data become available. Negative Housing Subsidies were lower than expected in part due to the launch of a new foreclosure mitigation program, which to date has experienced less demand than initially anticipated. For VHA, Community Care was $1.7 billion lower than expected due in part to the Change Healthcare cybersecurity attack that impacted obligation and outlay estimate.

Table 2- Receipts by Source 

Table 3- Outlays by Agency 

###

 

 

 

WASHINGTON – Today, U.S. Secretary of the Treasury Janet L. Yellen convened a meeting of the Financial Stability Oversight Council (Council) in executive session at the U.S. Department of the Treasury (Treasury).

During the meeting, the Council received an update by staff of the Office of the Comptroller of the Currency and Board of Governors of the Federal Reserve System on banking and commercial real estate developments. Council members noted that depository institutions should continue proactively to manage shifts in economic and interest rate conditions and discussed efforts undertaken by institutions and supervisors to enhance resilience planning.  The Council also discussed the need for continued monitoring of credit conditions, and the impact of interest rates on banks’ net interest margins, deposit flows, and fair-value losses on securities.

The Council also received an update from Federal Housing Finance Agency (FHFA) staff on an FHFA proposed rule to provide the Federal Home Loan Banks (FHLBs) with more flexibility to manage intraday liquidity and FHFA guidance to FHLBs on enhancing their credit risk management practices and liquidity access for members.

The Council also heard a presentation by Treasury staff on short-term investment vehicles (STIVs).  STIVs have increased their assets under management in recent years and are significant funding providers in critical short-term funding markets.  The Council discussed the performance of STIVs during prior stress events and the ongoing efforts of financial regulators to enhance the resilience of short-term funding markets.

Additionally, the Council received an update by staff of Treasury and other Council member agencies on regulators’ efforts to provide better visibility into private credit.  Council members noted that the current lack of transparency in the private credit market can make it challenging for regulators to fully assess the buildup of risks in the sector, and discussed member agencies’ efforts to enhance monitoring of this market.  

The Council also received an update by Treasury staff on the continuing development of the Council’s 2024 annual report.

In addition, the Council voted to approve the minutes of its previous meeting on September 20, 2024. 

In attendance at the Council meeting at Treasury or virtually were the following members: 

• Janet L. Yellen, Secretary of the Treasury (Chairperson of the Council)
• Jerome H. Powell, Chair, Board of Governors of the Federal Reserve System
• Michael J. Hsu, Acting Comptroller of the Currency
• Rohit Chopra, Director, Consumer Financial Protection Bureau
• Gary Gensler, Chair, Securities and Exchange Commission
• Martin Gruenberg, Chairman, Federal Deposit Insurance Corporation
• Rostin Behnam, Chairman, Commodity Futures Trading Commission
• Sandra L. Thompson, Director, Federal Housing Finance Agency
• Todd M. Harper, Chairman, National Credit Union Administration
• Thomas Workman, Independent Member with Insurance Expertise
• James Martin, Acting Director, Office of Financial Research (non-voting member)
• Steven Seitz, Director, Federal Insurance Office (non-voting member)
• Elizabeth K. Dwyer, Superintendent of Financial Services, Rhode Island Department of Business Regulation (non-voting member)
• Adrienne A. Harris, Superintendent, New York State Department of Financial Services (non-voting member)
• Melanie Lubin, Securities Commissioner, Office of the Attorney General of Maryland, Securities Division (non-voting member)

Additional information regarding the Council, its work, and the recently approved meeting minutes is available at http://www.fsoc.gov.  

###

As Prepared for Delivery

Thank you. Before our discussion, I’d like to speak to the Biden-Harris Administration’s international economic policy, which we’ll continue to move forward next week at the IMF and World Bank Annual Meetings. Our international economic policy has many objectives, including addressing critical challenges facing the entire globe. But I’d like to especially focus today on how it complements our domestic economic agenda to benefit American businesses and families.

At home, our Administration has driven a historic economic recovery. U.S. GDP growth is strong, our unemployment rate is near historic lows, and inflation has declined significantly. We’re now doing everything we can to lower costs for American families and pursuing a strategy I’ve called modern supply-side economics, which aims to expand our economy’s capacity to produce while reducing inequality. We’ve seen record small business growth and a historic boom in factory construction led by facilities producing semiconductors and electric vehicle batteries. Productivity growth has been strong. More prime-age Americans are participating in our labor force than at any point over the past two decades. And we’re reaching people and places that historically had not benefited from enough investment, supporting well-paying jobs for Americans without college degrees. America’s strong economic performance is helping power the global economy, which remains resilient though progress across economies has been uneven.

And it’s not just our actions at home that are supporting the global economy. But from the start of this Administration, President Biden and Vice President Harris have also charted a new course for America’s international economic policy. We’ve focused on stabilizing and strengthening relationships and working multilaterally, including because we believe that America’s economic well-being depends on a global economy that’s growing and secure. American businesses and families have a tremendous amount to gain from our connections to the global economy and from U.S. global economic leadership. We need to promote policies, investments, and institutions that support global growth, protect financial stability, and avoid economic instability. This includes tackling challenges like climate change, pandemics, and conflict and fragility that threaten to hold back global growth and that will be high on the agenda at next week’s meetings.

Calls for walling America off with high tariffs on friends and competitors alike or by treating even our closest allies as transactional partners are deeply misguided. Sweeping, untargeted tariffs would raise prices for American families and make our businesses less competitive. And we cannot even hope to advance our economic and security interests—such as opposing Russia’s illegal invasion of Ukraine—if we go it alone. But the issues we face today, from broken supply chains, to climate change and global pandemic preparedness, to China’s industrial overcapacity, also mean we cannot simply draw from an old playbook.

Let me explain how our approach is delivering the benefits of global growth to Americans, tackling global challenges, and countering threats to our competitiveness and national security. 

I. Delivering the Benefits of Global Growth to Americans

Let me start with how our work helps Americans realize the benefits of global growth, including through trade and investment. Trade expands the market for our exports, from services to goods like transportation equipment and electronics; helps our producers efficiently source key inputs; and enables American consumers to access more goods at lower prices. The U.S. Chamber of Commerce estimates that more than 41 million American jobs depend on trade. American businesses also grow from investing abroad. And recent research finds that over 10 percent of U.S. employment could be directly or indirectly attributable to foreign direct investment in the United States.

Trade and investment also offer crucial pathways to greater economic security. During the COVID-19 pandemic, we saw American consumers and businesses pay the price of broken or overconcentrated supply chains: When the chips shortage forced temporary plant closures, companies lost revenue, workers lost wages, and families faced higher prices.

Our work to reinvigorate American manufacturing, including through the CHIPS and Science Act, is necessary. But it’s not sufficient to realize the promise of trade and investment and to confront supply chain challenges. This requires strategic global engagement.

So, we led efforts to put in place a global minimum tax that will prevent a race to the bottom. It will also level the playing field for American businesses, providing us with more resources to invest at home.

We’re strengthening our supply chains through an approach I’ve called friendshoring, which aims to bolster ties with a wide range of trusted allies and partners.

We and partners launched the Minerals Security Partnership to accelerate the development of critical minerals supply chains. We negotiated a critical minerals agreement with Japan and a supply chain agreement with Indo-Pacific Economic Framework for Prosperity partner countries. We’re supporting the Partnership for Resilient and Inclusive Supply-chain Enhancement and working with the Inter-American Development Bank to find opportunities to enhance competitiveness and support key supply chains in Americas Partnership for Economic Prosperity countries. We’re leveraging the CHIPS and Science Act to pursue partnerships to diversify the global semiconductor ecosystem. And last May, we took another step forward by launching the Nairobi-Washington Vision to accelerate investments toward clean and resilient economies and supply chains.

I’ve seen the fruits of our engagement in my travels as Treasury Secretary, from an American company processing lithium in Chile to a U.S.-funded job training facility in South Africa, among many other examples. Through our global engagements, we’re strengthening economies around the world. And we’re growing American businesses and creating American jobs, supporting American consumers, and increasing our country’s economic security. 

II. Tackling Global Challenges

America’s economic future, however, also depends on tackling challenges that cross borders to affect people and economies around the world, including the American people and the U.S. economy.

I’ll start with pandemics. No matter what we do at home, without addressing critical gaps in the global health infrastructure to strengthen global preparedness, preparation, and response, a future pandemic could negatively impact many economies, with significant spillovers to ours.

So, in the aftermath of the COVID-19 pandemic, I worked with fellow finance and health ministers to take actions like launching the Pandemic Fund. It was set up and scaled in record time and is now allocating desperately needed resources in response to its second call for proposals to support countries across the globe, in turn making Americans safer and more secure.

Climate change is another powerful example. The destruction we’ve seen this hurricane season in the United States is the latest reminder of the need for bold action. At home, our actions include fueling the transition to clean energy through the Inflation Reduction Act, developing Principles for Net-Zero Financing and Investment to affirm the importance of credible net-zero commitments, and addressing the risks climate change poses to U.S. financial stability. But emissions everywhere around the globe contribute to climate change. And we’re impacted by increasingly severe and frequent climate-related events, wherever they occur. Damage to infrastructure abroad affects the availability and prices of energy and agricultural goods like coffee and cacao. We suffer from smoke from wildfires in Canada and from precarious shared water resources with Mexico. And the potential risks climate change poses to global financial stability are increasingly widely recognized as well. This means that helping countries around the world mitigate and adapt and financial institutions globally pursue transition finance is crucial, including to protect American businesses and families.

So, we’ve made a massive push as part our multilateral development bank evolution agenda to better equip the MDBs to help countries address climate change, including through increasing climate financing. We’ve worked with partners to launch Just Energy Transition Partnerships to help countries accelerate their transitions and strengthen their economies. We’ve pursued bilateral efforts like the partnership we launched with Brazil’s Fazenda in July and are working multilaterally, such as through the G20 Sustainable Finance Working Group. And we’ve been focused on harnessing the private sector, including through the Partnership for Global Infrastructure and Investment and the Global Agriculture and Food Security Program.

Alongside pandemics and climate change, conflict and fragility abroad also pose risks, to countries around the world and to America’s economy and national security, so we’re engaging on these challenges as well, including through the MDB evolution agenda.

Nor do risks to financial stability respect national borders, making the work of the Financial Stability Board and other global collaboration critical to ensuring a safe, stable, effective financial system and protecting the global and U.S. economy.

Put simply, in engaging to support countries around the world in tackling today’s greatest challenges, we also lower the likelihood of negative spillovers to the U.S. economy like weakened markets for our exports and increased instability. The scale and nature of these challenges mean there is no alternative but to engage.

III. Countering Threats to our Competitiveness and National Security

Let me end by emphasizing a third way in which our global engagement supports Americans: bolstering our competitiveness and national security, including through our approach to China.

Trade and investment with China can bring significant gains to American firms and workers and must be maintained. But we must also have a healthy economic relationship based on a level playing field. China’s barriers to market access and unfair trade practices currently cause challenges for American firms and workers and for other foreign businesses looking to operate in China. China’s policies are also leading to industrial overcapacity in critical industries, threatening the viability of American and other firms and increasing the risk of overconcentrated supply chains that undermine global economic resilience.

No matter how much we invest to strengthen our manufacturing at home, we cannot support American businesses and families without also engaging to address these challenges. The United States announced strategic and targeted steps in key sectors as a result of the Section 301 review to respond to unfair trade practices by the PRC. The European Union and emerging market countries have also taken or are exploring actions. I’ve raised concerns about overcapacity frequently and directly with my Chinese counterparts, including on multiple trips to China, and with America’s allies and partners, who share these concerns and are also responding. This growing international consensus is a powerful indication to China that it must shift its practices.

Russia’s war on Ukraine has also revealed the necessity of strategic global engagement. Russia’s invasion caused immediate economic shocks, like record gas prices in June of 2022. At home, releasing barrels from the Strategic Petroleum Reserve and record domestic oil and natural gas production helped address our short-term needs. But this would not have been enough to keep global energy markets well-supplied, nor to oppose the threat Putin’s actions pose to the rules-based international order that underlies the strength of the global economy and the international financial system.  

So, we formed a strong coalition and put in place a novel price cap, helping keep prices lower for American and global consumers than many economists forecast following the invasion. We’ve continued to strengthen sanctions that constrict Russia’s ability to wage war. We’re working towards unlocking the value of Russian sovereign assets to support Ukraine. This sustained, global action allows us to accomplish what we could not alone, delivering immediate results and sending the clear message that dictators like Putin do not operate with impunity. Failing to engage or not engaging strategically would have disastrous effects, enabling Putin to destabilize Europe and undermining our collective security and the global economy.

In the coming months, we will continue to be focused on these and other priorities, including using all the tools at our disposal in response to the ongoing conflict in the Middle East. We’ve imposed sanctions on terrorist actors including Hamas, the Houthis, and Hezbollah. And we’re also working to increase stability in the region by ensuring that legitimate aid flows reach Gaza and pressing for measures to support the West Bank economy.

IV. Conclusion

Over the past four years, the world has been through a lot: from a once-in-a-century pandemic, to the largest land war in Europe since World War II, to increasingly frequent and severe climate disasters. This has only underlined that we are all in it together. America’s economic well-being depends on the world’s, and America’s economic leadership is key to global prosperity and security. American isolationism and retrenchment will leave all of us worse off.

I am convinced that there is simply no other path forward than the one we will continue pursuing next week and in the months ahead: strategic international economic policy that delivers for American families and businesses and others around the world.

I now very much look forward to our discussion.

###