The International Monetary Fund (IMF) has warned of massive disruption throughout the world in case the US government defaults on its debt.
“If there is that degree of disruption, that lack of certainty, that lack of trust in the US signature, it would mean massive disruption the world over, and we would be at risk of tipping yet again into a recession,” IMF Managing Director Christine Lagarde said on Sunday.
Reports say that the government may default on its debts by October 17 if feuding Democratic and Republican politicians fail to cut a deal to raise the country™s borrowing limit.
On Saturday, Senate Republicans blocked a bid by Senate Majority Leader Harry Reid to extend the nation™s borrowing authority until after the 2014 midterm elections.
Reid warned ahead of the vote that allowing the borrowing authority to expire would send the US economy into a tailspin.
œWhat a sad day for America,” he said. œThey™re voting to not allow us to even debate whether the debt ceiling should be raised. Are they afraid of that? Do they just want this to go away?” the leader of Senate Democrats said, referring to his Republican colleagues.
Reid and Minority Leader Mitch McConnell are negotiating a possible solution to the impasse that has threatened a first-ever default on the US debt.
The Treasury Department has warned that Congress must lift the debt ceiling by October 17 when the US is slated to exhaust its borrowing authority.
The US government partially shut down after lawmakers at the divided Congress were unable to reach a compromise over a budget bill by October 1, the start of fiscal 2014.
IA/HN/AS
Copyright: Press TV