US budget surplus highest in five years in June.

President Obama The Obama administration expects the US budget deficit to shrink the most in 5 years.

The US government reported a budget surplus of $116.5bn (£77.02bn) in June, the most in five years.

The improving US economy meant that tax receipts were higher than expected.

Also, government spending plunged by 47% due to package of spending cuts and tax increases passed in January, know as the sequester.

Government owned mortgage firms, Fannie Mae and Freddie Mac, added $66.3bn (£43.8bn) in payments. They have been in public ownership since 2008.

Despite that strong month, the Congressional Budget Office forecasts the annual deficit will be $670bn (£443bn) when the budget year ends on Sept. 30.

The US government is once again expected to hit its debt ceiling - the point at which it must borrow more money to pay for ongoing obligations - in the autumn.

The Obama administration must get Congressional approval to raise the limit, which has often proved to be a pivotal point for negotiating future spending deals.

In 2011, the federal government almost shut down as a result of the negotiations and rating agency Standard and Poor's downgraded the US's credit rating from AAA to AA+.

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