2023-05-11 16:04:18
The International Monetary Fund warned Thursday of serious repercussions if the United States defaults on its debt, as a deadline approaches for the country to raise or suspend the debt ceiling.
IMF spokeswoman Julie Kozak said in a press briefing: “Our assessment indicates very serious repercussions are expected, not only for the United States, but also for the global economy, in the event that the United States defaults,” calling on all parties concerned to resolve the issue. Urgently.
She added that “the US authorities should be careful regarding new vulnerabilities in the US banking sector, including regional banks, which might emerge … in light of the significant rise in interest rates.”
US President Joe Biden ramped up pressure on Republican lawmakers on Wednesday to move quickly to raise the country’s $31.4 trillion debt ceiling or risk the world’s largest economy slipping into recession.
Biden met Republican US House Speaker Kevin McCarthy this week regarding this crisis, without making any progress.
Biden and McCarthy will meet once more on Friday in an effort to find a solution to the dispute.
Congressional Republicans require that Biden initially agree to a significant reduction in budget expenditures, before they agree to raise the debt ceiling, a measure that will allow the government to borrow more money.
And US Treasury Secretary Janet Yellen warned in early May that the United States, which is the world’s largest economy, is threatened with defaulting on its debts, as of early June.
This poses a great risk to the United States, which has never found itself in default on its debt.
But if the stalemate continues following June 1, according to the administration, the United States will find itself unable to pay bills and salaries, and also unable to pay back its creditors.
The IMF warned Thursday of the possibility of higher borrowing costs, broader global instability and economic repercussions if the United States defaults on its debt.
“We have seen that our world has been affected in recent years by many shocks, so we want to avoid dangerous repercussions,” Kozak said.
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