On Wednesday 24-05-2023, Fitch Agency issued a statement assigning the AAA credit rating of the United States of America under surveillance, in preparation for a possible downgrade due to fears of Washington defaulting on its debts if the public debt is not raised.
Fitch Statement
The agency said in a statement that its decision “reflects the growing political tensions that impede resolving the problem by raising the ceiling of the public debt or suspending its work, at a time when the deadline for the US public debt to reach the ceiling legally set for it is fast approaching.”
Congress must raise or suspend the public debt ceiling as soon as possible to avoid the US falling into default, for the first time in its history.
According to the US Treasury Department, the US public debt can reach its legal ceiling within nine days, and the US public debt ceiling is currently $31 billion.
“Fitch” confirmed that it expects a right decision on the part of the United States of America at the right time, but nevertheless, experts believe that there is “a high risk that the debt ceiling will not be raised or suspended in a timely manner, and that the government will start to fail to make some payments.”
Fitch also warned that failure to reach an agreement would be a negative sign in terms of governance in general and the desire of the United States to fulfill its obligations within the specified deadlines.
The agency confirmed that it will closely monitor developments in the situation of the US public debt ceiling, noting that if the United States does not pay debts that are due on the first or second of June, it will be considered defaulting, and the subsequent debts that are due within 30 days will become very risky. This means that the degree of these debts will become (CCC).
As for the rest of the debt, Fitch said that its rating will remain unchanged, as the United States has the largest reserves of funds in the world.
US debt ceiling
Speaker of the House Kevin McCarthy announced on Thursday, 05-25-2023, that some progress has been made in the negotiations to raise the US debt ceiling, but there are still many outstanding issues, while the deadline approaches to raise the federal government’s borrowing limit of $ 31.4 trillion or risk default. obligations.
“This is not entirely surprising given the chaos in the debt ceiling negotiations,” said Tony Sycamore, an analyst at IG Markets in Sydney, Australia.
Negotiators and representatives of Democratic President Joe Biden and McCarthy held productive talks, as both sides described on Wednesday, at the White House as they tried to conclude an agreement.
