The government's ability to pay back $35 billion from April through June, by retiring bonds, notes and bills, comes from increased tax revenues and greater spending cuts, which are improving Washington's finances and helping the government ratchet down the deficit, the department said.
"The decrease in borrowing relates primarily to higher receipts, lower outlays and changes in cash-balance assumptions," it said.
As a reflection of changing cash-balance assumptions, the government projected three months ago it would have to borrow $103 billion during the April-June period.
"The paydown this quarter, the first since 2007, is emblematic of the turn in budget finances from horrible, to grim on their way to steadily better," Eric Green, global head of research at TD Securities in New York, said in a note.
The second quarter is typically the best of the year for government cash flow because of April tax payments.
But in the same quarter last year, the Treasury added $172 billion to the U.S. debt, The Wall Street Journal said.
At the same time, the Treasury said Monday it would likely have to borrow a net $223 billion in the July-September period.
The U.S. budget deficit will likely hit $845 billion when the fiscal year ends Sept. 30, down from more than $1 trillion the past four years, the non-partisan Congressional Budget Office says.
The overall U.S. debt was $16.72 trillion Friday.