2023-05-11 15:42:14
“There would be very serious repercussions not only for the United States but also for the world economy in the event of a default on the American debt,” International Monetary Fund communications director Julie Kozack said during the meeting. of a telephone press conference.
“We strongly encourage the parties in the United States to come together to reach a consensus to resolve this issue as a matter of urgency,” she added.
Among the repercussions, Julie Kozack cited “higher interest rates, broader instability and economic repercussions”.
Democrats and Republicans are engaged in a tussle over raising the US debt ceiling, a necessary legislative maneuver so that the world’s largest economy can continue to borrow and pay its bills, its officials and its creditors.
Without an agreement, the world’s largest economy would find itself, potentially from June 1, in default of payment, an unprecedented situation.
President Joe Biden, who is ruling out budget cuts for the time being, accusing Republicans in Congress of holding the economy “hostage”, received officials from both sides at the White House on Wednesday, and a new meeting is scheduled for Friday.
Former Republican President Donald Trump, a candidate for the 2024 election, urged Republican lawmakers on Wednesday to “cause a default” if Democrats do not concede “massive cuts”. He, however, felt the default would likely be averted, predicting Democrats would “give in” on the matter.
But Joe Biden’s Minister of Economy and Finance, US Treasury Secretary Janet Yellen, then issued a warning. She felt that only flirting with default, pushing negotiations to their limits “can lead to significant economic costs”.
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