Published: Thursday, 12 Nov 2009 | 4:09 PM ET

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Now that more banks are preparing to repay billions of dollars in TARP money, what is the government planning to do with it?

Treasury Secretary Timothy Geithner told CNBC Asia Thursday that the government will be able to pay down more debt and borrow less than initially expected because more banks are repaying money to the $700 billion Troubled Asset Relief Program. He added that he expects "substantial repayments" by banks in the coming weeks.

As of Wednesday, the Treasury said it had received repayments of $73.02 billion and had collected dividends, interest and warrant sale profits totaling $13.03 billion.

The Obama administration is still debating whether to use the repayments to cut the deficit, the Wall Street Journal reported, saying some officials would like to keep some of the unspent money in case of emergencies.

A US Treasury source also told Reuters that it was shifting the focus of the TARP program toward helping small business and the housing sector rather than large banks.

"As that focus shifts, we expect to use significantly less TARP funding than authorized," the source said. "We will maintain the flexibility to deal with a future crisis, and uninvested TARP money is dedicated to reducing the debt."

The U.S. budget deficit soared to a record $1.4 trillion in the fiscal year that ended on Sept. 30 and is expected to be about the same this fiscal year as the economic slump caused tax revenues to plunge and spending soared.

Budget experts project deficits will remain stubbornly high over the next 10 years even as the economy improves, which could lead to increased borrowing costs, further weakness in the U.S. dollar and runaway inflation.

But Geithner told CNBC that the government will borrow less because of the bank repayments.

"We are likely to have to borrow substantially less than we initially anticipated to help repair the damage to our financial system," Geithner told CNBC in Singapore.

The Journal added that the projected long-term cost of TARP will likely be lowered from $341 billion to as little as $200 billion.

—Reuters contributed to this report

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