The International Monetary Fund (IMF) warned that a US default would seriously affect the US economy and drag down the global economy; a number of countries economies have been hurt by U.S. interest rate hikes, and future global economic growth is expected to be unfavorable. the IMF urged U.S. Democrats and Republicans to reach a consensus on the debt ceiling.

Hong Kong China News Agency reported that IMF spokesman Kozak said at a press conference on Thursday local time that a U.S. debt default would have many potential consequences, including higher interest rates and greater economic instability. They urged the U.S. to solve the problem as soon as possible.

Experts analyze the crisis that US default can cause

Us Defaults
Image Credit: Business Recorder

The statutory debt ceiling refers to the total amount of debt the U.S. government can borrow to meet its statutory obligations, including payments for Social Security, Medicare benefits, military pay, and national debt interest, as Congress authorized. The U.S. Treasury borrowing authority is exhausted if this red line is exceeded. If Congress does not raise the debt ceiling, the White House has no authority to continue to raise debt.

In an interview with Hong Kong’s China News Service, Liu Chunsheng, an associate professor at the School of International Economics and Trade of the Central University of Finance and Economics, said that the U.S. would face default if the debt ceiling is not raised. The United States is the world’s largest economy, if there is a debt default situation, then there will be serious damage to the US credibility. Therefore, we can see that the Biden administration is actively saving and avoiding the default.

Video Credit: Arirang News

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