He International Monetary Fund warned of “very serious repercussions” for the United States and the world economy if the nation defaults on its debt, urging Democrats and Republicans to reach consensus on the debt limit.
The possible Consequences of a US default would include higher interest rates and broader instability, the IMF spokeswoman said on Thursday, Julie Kozackin a briefing. That would add to the difficulties of recent years, she said, including the Covid-19 pandemic and the war in Ukraine.
“The discussions in the US are taking place at a very difficult time for the global economy,” he said. “Our assessment is that there would be very serious repercussions, not only for the US but also for the world economy, in the event of a US debt default and we strongly encourage the parties in the US to come together to reach a consensus to urgently address this matter.”
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President Joe Biden and congressional leaders are scheduled to meet on Friday to discuss the issue of debt, after a meeting they held on Tuesday.
Possible consequences of the US debt default
The US Secretary of the Treasury, Janet Yellen, this week warned that a default “it would cause a global recession” and that it “would also risk undermining US global economic leadership and cast doubt on our ability to defend our national security interests.”
Rising interest rates have already affected some countries, especially those with debt problems and vulnerabilities, Kozack said. The IMF estimates that 15% of low-income countries are debt-stressed and 45% are at risk of being so, and they already forecast global growth over the next five years to be the weakest in more than three decades. .
The US Government reached the legal limit on loans in January and, since then, the Treasury has been using special accounting measures. Yellen has told Congress those measures could run out on June 1.
LM
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