Means of Financing
Means of financing means borrowing, use of cash balances, and certain other transactions that are used to finance a deficit or a surplus. By definition, the means of financing are not treated as receipts or outlays.
Means of Financing (GAO)
Ways in which a budget deficit is financed or a budget surplus is used. A budget deficit may be financed by the Department of the Treasury (Treasury) (or agency) borrowing, by reducing Treasury cash balances, by the sale of gold, by seigniorage, by net cash flows resulting from transactions in credit financing accounts, by allowing certain unpaid liabilities to increase, or by other similar transactions. It is customary to separate total means of financing into “change in debt held by the public” (the government’s debt, which is the primary means of financing) and “other means of financing” (seigniorage, change in cash balances, transactions of credit financing accounts, etc.). (See also Debt, Federal; Debt Service; Financing Account under Credit Reform Accounts under Federal Credit; Seigniorage.)
Means of Financing (OMB)
These are monies received or paid by the Government that are not counted in the budget totals as either collections (governmental receipts, offsetting collections, or offsetting receipts) or outgo (outlays). Borrowing and the repayment of debt are the primary means of financing. Others are listed below. These monies finance outlays when there is a deficit—that is, when outlays (net of offsetting collections and offsetting receipts) exceed receipts. When there is a surplus—that is, when receipts exceed outlays (net of offsetting collections and offsetting receipts)—the means of financing may be used, together with the surplus, to retire debt.
Most of the individual means of financing represent changes in assets or liabilities and therefore can either be a source of financing for the Government or require financing themselves. For example, if the disbursements from credit financing accounts exceed their collections, which is normal, the difference must be financed by receipts or the other means of financing; if the disbursements are less than the collections, the difference may be used to reduce borrowing or to provide any financing required by the other means of financing. The means of financing other than borrowing and repayment of debt include:
- Net financing disbursements by direct loan and guaranteed loan financing accounts;
- Seigniorage (the profit from coining money) and profits on the sale of gold (a monetary asset);
- Certain exchanges of cash, such as deposits by the U.S. in the International Monetary Fund;
- Changes in Treasury’s operating cash balance, uninvested deposit fund balances, and checks outstanding; and
- Treasury debt buyback premiums and discounts (see section 113).
For more information on the means of financing, see the section on Budget Deficit or Surplus and Means of Financing in Chapter 9, “Budget Concepts” of the Analytical Perspectives volume of the President’s Budget.