WASHINGTON (Reuters) - The U.S. Treasury said on Wednesday it has reached a deal with the U.S. Postal Service on the conditions of a loan of up to $10 billion that was included in recent coronavirus relief legislation.
The head of the service said the borrowing would push off an “approaching liquidity crisis,” but not solve its financial problems.
“The Postal Service, however, remains on an unsustainable path and we will continue to focus on improving operational efficiency and pursuing other reforms in order to put the Postal Service on a trajectory for long-term financial stability,” recently appointed Postmaster General Louis DeJoy said in a statement.
President Donald Trump nominated Dejoy to bring the service’s finances in line and he is pushing to cut costs even if it means delaying deliveries.
The service does not need to borrow at the moment, but the money will now be available should the financially strained agency have to access it, Treasury Secretary Steven Mnuchin said in a statement.
“While the USPS is able to fund its operating expenses without additional borrowing at this time, we are pleased to have reached an agreement on the material terms and conditions of a loan, should the need arise,” said Mnuchin.
Already saddled by a large pension and healthcare burden, the service had seen revenues decline from the rise of private delivery companies and email well before the coronavirus pandemic hobbled the U.S. economy.
Once the coronavirus pandemic gripped the country, people began relying on the mail more for delivering goods bought on-line and, in many areas, to vote safely in elections. Congress included the lending in recent legislation meant to blunt the economic pain of the pandemic and keep the postal service operational during this time of extra demand.
The USPS Board of Governors approved the loan agreement in principle on Tuesday and expects to develop formal loan documents in the coming weeks, according to the service.
(This story corrects to remove reference to federal funding in paragraph 7, clarifies Trump’s role in selection in paragraph 4)
Reporting by Lisa Lambert and Susan Heavey; Editing by Chris Reese and Dan Grebler