![The Treasury says it will not run out of money until at least June 5, buying time for debt ceiling talks](https://image.cnbcfm.com/api/v1/image/107247506-16851327481685132745-29624853742-1080pnbcnews.jpg?v=1685132928&w=750&h=422&vtcrop=y)
WASHINGTON — Treasury Secretary Janet Yellen said Friday that the United States is prone to have enough reserves to beat back a possible debt default until June 5.
“Currently, we estimate that the Treasury may have insufficient funds to satisfy the government’s obligations if Congress doesn’t raise or suspend the debt limit by June 5,” Yellen wrote. in a letter Kevin McCarthy, Speaker of the House of Representatives.
The new date on Friday provided a much-needed respite in negotiations between the White House and Congressional Republicans, who gave the impression to be moving closer to a compromise agreement on Friday to lift the debt ceiling by two years.
The last time the so-called “X-date” was updated was May 1, when Yellen told Congress that the US had enough money to satisfy its obligations by “early June, potentially as soon as June 1.”
Friday’s letter was the first since Yellen began sending regular updates to Congress in January that the secretary had not reserved the date with the phrase “as early as.”
As a substitute, Yellen explained that the Treasury would make greater than “$130 billion of scheduled payments in the first two days of June,” leaving the agency with an “extremely low level of resources.”
“For the week starting June 5, the Treasury plans to make roughly $92 billion price of payments and transfers,” Yellen continued, and “our projected resources can be insufficient to satisfy all these commitments.”
To spotlight how low Treasury reserves had fallen, Yellen said the agency was forced to make use of an obscure measure on Thursday to transfer $2 billion from a civil service pension fund to the government’s predominant lending institution, the Federal Finance Bank.
The move was needed because “the extremely low level of remaining funds necessitates the exhaustion of all available emergency funds to avoid failing to satisfy all government commitments,” Yellen wrote.
Markets closed higher on Friday, fueled partially by optimism that the deal will likely be passed by the House and Senate and signed by the president by June 1.
But as talks dragged on this week, with the parties involved yielding little greater than vague claims of “progress,” optimism faded that a deal can be reached by the end of Friday.
Officials said Friday was widely seen as the last possible day to achieve a deal, and there is still enough time to show it into laws, pass in the House of Representatives after which in the Senate before the previous “X date” on June 1.
Yellen’s new date comes amid growing concerns around the world over the US credit standing.
On Wednesday, rankings agency Fitch announced that it had given the United States a triple-A rating on a “negative watch rating”.
Friday at the preliminary International Monetary Fund annual assessment US officials wrote that “swinging past the federal debt ceiling could create further, entirely avoidable systemic risk to each the US and the global economy.”
If the US formally becomes insolvent, even for a number of days, it could raise rates of interest and undermine confidence in the US dollar. Economists note that America’s adversaries, particularly Russia and China, are watching the current debt ceiling situation with ecstasy, confident that the erosion of confidence in the US dollar will profit them.