Posted May 13, 2023 01:00AM
WASHINGTON (Reuters) – The crisis of raising the $31.4 trillion U.S. debt ceiling has added to global economic concerns, as a new congressional report cites a “high risk” of a historic U.S. default within the first two weeks of June. .
The Congressional Budget Office report, released on Friday morning, confirmed concerns that Treasury Secretary Janet Yellen had warned that a default could occur on June 1.
“There is a significant risk that at some point during the first two weeks of June, the government will not be able to pay all of its obligations,” the office warned.
The office also noted that federal government debt payments “will remain uncertain throughout May, even if Treasury funds run out in early June.”
US President Joe Biden and Democrats in Congress have called for swift action to raise the legal ceiling for borrowing of $31.4 trillion without conditions since the beginning of the year.
Republicans, who narrowly control the House of Representatives, want to put new limits on future spending before they give the go-ahead for more payments to cover borrowing on spending they approved earlier.
At a meeting of finance officials from the Group of Seven countries in Japan, World Bank President David Malpass said the prospect of a US default, for the first time in its history, would add to the problems facing the slowing global economy.
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“This is clear, the crisis that the world’s largest economy is exposed to will negatively affect everyone,” Malpass told Reuters on the sidelines of the meeting.
Biden is scheduled to attend a meeting of G7 leaders in Niigata, Japan, next week, but said this week he might cancel his trip if he and congressional leaders don’t make enough progress on raising the debt ceiling.
(Prepared by Mohamed Attia for the Arabic Bulletin – Edited by Marwa Salam)
Written by: Reuters