General Motors Co believes taxpayers could recoup their entire $50 billion investment in the company although the Obama administration still expects the government to take a loss, albeit a smaller one than first thought, on the industry's 2009 bailout.

GM Chief Executive Ed Whitacre told reporters on Wednesday night after meeting with Treasury Secretary Timothy Geithner and House Speaker Nancy Pelosi that GM was making good progress and an initial public offering was a real possibility later this year or in 2011.

I think the stock could be worth a lot and the taxpayers could get all their money, plus, Whitacre said. I'm an optimistic guy.

Whitacre's comments came after he announced earlier in the day at a plant in Kansas that GM had fully repaid the balance on more than $8 billion in U.S. and Canadian government loans extended as part of its bankruptcy last year.

We are encouraged that GM has repaid its debt well ahead of schedule and confident that the company is on a strong path to viability, Geithner said in a statement.

Separately, Chrysler posted a $143 million operating profit in the first quarter and said it was on track to at least break even in 2010 on an operating basis with a stronger cash position.

Chrysler emerged from bankruptcy in June 2009 under the management control of Italy's Fiat SpA . An IPO also is envisioned for Chrysler, although not as soon as GM's.

Edmunds.com senior analyst Michelle Krebs said Fiat/Chrysler deserves a lot of credit for progress so far. It was questionable whether they'd survive 2010, but now the company seems to be on track for better days.

Questions remain, however, about whether Fiat can stem the long-running slide in sales and replenish a depleted product lineup.

The better-than-expected progress at GM and Chrysler have materially improved chances the U.S. government will sell its stake in the companies sooner than expected, top White House economic adviser Lawrence Summers said in statement.

In an accompanying government report, overall bailout investments in GM, Chrysler and financing arm GMAC by the Bush and Obama administrations will likely result in some loss. However, the Treasury Department anticipates the shortfall to be much lower than forecast last year.

We're not out of the woods by any stretch of the imagination. We have seen improvement, White House spokesman Robert Gibbs said.

In addition to the nearly $7 billion in direct loans to GM, the U.S. Treasury extended $43 billion in bailout cash in 2009 -- for a total $50 billion investment.

The non-loan portion of help for GM was converted into equity during its bankruptcy and represents the 60 percent stake in the company owned by the government.

The potential loss on paper to taxpayers on GM alone was once thought to be as high as $30 billion, according to the White House budget office. The projected shortfall is now under $8 billion, according to market calculations.

Updated projections mainly revolve around an analysis of old GM bonds, which have a claim on new equity and today would be worth about $33 billion to the government, figures show.

Other gains include the $6.8 billion value of the loan repayment and roughly $2.2 billion in preferred stock held by the Treasury.

Whitacre, who paid for a chartered plane out of his own pocket to fly to Washington, said the loan repayment does not affect the timing of a possible IPO, and he believes the likelihood GM will make taxpayers whole is very high.

Pelosi said in a statement that GM must continue on a path to ensure that taxpayers recoup their full investment.

Chrysler owes the U.S. government nearly $7 billion in loans out of roughly $12 billion in total aid.

Chrysler has not begun repaying its loan, but payments on principal are not due until 2011. Full repayment is not expected until 2014.

The rest of Chrysler's bailout was converted to equity in the restructured company of which Treasury owns nearly 10 percent.

It is unclear how much of Chrysler's investment the government will wind up recapturing.

Summers said progress by automakers such as GM in repaying bailout funds ahead of schedule was a bright spot for economic recovery, though the auto industry and economy have a long way to go to repair the damage from the recession.

The repaying of the GM loans and the completion earlier in April of full accounting for its results since its emergence from bankruptcy in July 2009, were two key steps GM needed to make toward launching an IPO.

(Additional reporting by Carey Gillam in Kansas City, Tabassum Zakaria, Nancy Waitz and David Lawder in Washington; Editing by Maureen Bavdek and Carol Bishopric)

Timothy geithner Nancy Pelosi General motors