Treasury taking prudent steps to meet immediate cash flow needs, including extending line of credit and capping interest rate at 2%
Harrisburg, PA - Pennsylvania State Treasurer Joe Torsella today issued the following statement regarding the liquidity of Commonwealth funds in the coming months and the steps Treasury has taken to preserve the ability of the Commonwealth to meet critical expenditure needs:
“As our Commonwealth makes extraordinary but critically important sacrifices for the sake of public health, Pennsylvania Treasury will continue to focus on the ways we can help, and the things we can control, in these challenging and uncertain times. That’s why I’m providing an update today on the steps Treasury has already taken, and our expectations for the months ahead, to ensure adequate liquidity in Commonwealth funds.
“Prior to the start of coronavirus mitigation efforts – including the closure of businesses statewide and state tax filing deadline extension – the Pennsylvania Treasury approved a $2 billion short term line of credit to the General Fund, originally set to expire April 12. In order to permit a continued focus on fighting COVID-19, we have extended this expiration date to June 12. In addition, Treasury will cap the interest rate on this line of credit at 2 percent – reducing the General Fund’s exposure to rate volatility and stabilizing debt service costs.
“I will continue to monitor the General Fund’s cash balance and work with the Governor’s Budget Office to make additional adjustments to Treasury’s short term line of credit as may be necessitated by changing economic circumstances.
“Treasury is anticipating a significant cash shortfall in the General Fund prior to the inflow of federal stimulus money, as a result of necessary coronavirus mitigation efforts. We are taking prudent steps to ensure adequate liquidity in our investment funds to be in a position to provide additional support to the General Fund over the next several months if needed.
“I am grateful to Governor Tom Wolf and Secretary of Health Rachel Levine for their leadership during these uncertain times and to the Pennsylvania General Assembly for their support of relief efforts. I am also encouraged by the steps taken by the federal government to provide financial relief to states. And of course, we are all grateful to the health care professionals, first responders, and so many more essential personnel working in life-sustaining businesses.
“While these financial pressures are unprecedented, Treasury is committed to taking all prudent steps to ensure the critical cash needs of the Commonwealth will continue to be met.”
Pennsylvania State Treasurer, Joe Torsella