US credit rating in jeopardy

Published May 26, 2023
A trader works the floor of the New York Stock Exchange at the opening bell, on May 25 in New York City. — AFP
A trader works the floor of the New York Stock Exchange at the opening bell, on May 25 in New York City. — AFP

WASHINGTON: Ratings agency Fitch put the United States on notice Wednesday that its perfect credit rating could be jeopardised if the White House and Republican opposition fail to overcome their impasse on raising the nation’s borrowing limit, a week before a key deadline.

Fitch placed the country’s AAA-ranked credit on “rating watch negative” — a move it said “reflects increased political partisanship that is hindering reaching a resolution to raise or suspend the debt limit” before June 1.

That is the “X-date” when the US Treasury Department says that — short of an agreement — the government will run out of money, triggering a default with likely devastating economic consequences for the United States and potentially worldwide.

“Fitch still expects a resolution to the debt limit before the X-date,” Fitch said in a statement. “However, we believe risks have risen that the debt limit will not be raised or suspended before the X-date and consequently that the government could begin to miss payments on some of its obligations.”

The Treasury stressed that Fitch’s move should serve as a wakeup call.

“Tonight’s warning underscores the need for swift bipartisan action by Congress to raise or suspend the debt limit and avoid a manufactured crisis for our economy,” Treasury spokesperson Lily Adams said in a statement.

Published in Dawn, May 26th, 2023

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