FROM THE OFFICE OF PUBLIC AFFAIRS

Treasury Secretary Lawrence H. Summers on Thursday announced the introduction of debt buybacks, an important new tool for Treasury's management of the public debt and announced Treasury's plan to buy back as much as $30 billion of Federal debt held by the public.

"Buying back old, higher-interest debt allows us to manage the Federal debt in a way that saves the American taxpayer money," said Secretary Summers. "We are committed to paying down the Federal debt in a way that best serves the interest of the American taxpayer."

During the first half of the year, Treasury plans to conduct several buyback operations and may buy back as much as $30 billion in 2000.

Debt buybacks have several advantages for Federal debt management. They enhance the liquidity of Treasury benchmark securities, which promotes overall market liquidity and should help reduce the government's interest costs over time. Buybacks will help prevent a potentially costly and unjustified increase in the average maturity of American debt by paying off debt that has substantial remaining maturity. When tax revenues exceed immediate spending needs debt buybacks are an effective use of excess cash.

Over the last two years, America has made the largest pay down of debt ever -- $140 billion -- and debt held by the public is $1.7 trillion lower than it was projected to be in 1993. As a result, in 1999 alone, interest payments on the debt were $91 billion lower than projected.