IMF Chief Christine Lagarde said a œlack of certainty” threatened the global economy.
Global economic partners of the United States have warned the country against a possible default on its huge debt, calling on Washington to raise the debt ceiling and reopen the government as soon as possible.
Representatives from dozens of countries at World Bank and International Monetary Fund meetings being held in Washington said on Sunday that they are worried about the US fiscal problems.
IMF Managing Director Christine Lagarde said in an interview on the NBC News program œMeet the Press” that the US fiscal problems overshadowed the official agendas for the meetings originally aimed at discussing the international recovery.
œThen they found out that the debt ceiling was the issue,” Legarde said. œThey found out that the (US) government had shut down and that there was no remedy in sight,” she added. œSo it really completely transformed the meeting in the last few days.”
With only three days left before a potential default, US Senate leaders failed on Sunday to reach agreement on a plan to reopen the government and raise the current $16.7 trillion debt limit.
The two houses in the US congress failed on September 30 to agree a budget. So, the government has shut down many of its operations since then while the nation is approaching an October 17 deadline to raise the debt limit or face its first default in history.
World leaders pressed US Treasury Secretary Jacob J. Lew and the Federal Reserve chairman, Ben S. Bernanke – who were both at the IMF meeting – on the debt issue, predicting that even a near-default would lead to higher borrowing costs and a slowdown of the global economy.
œThis cannot happen, and this shall not happen,” Baudouin Prot, chairman of the French bank BNP Paribas, said at a meeting of the Institute of International Finance also being held in Washington, according to the New York Times. œThe consequences of this would be absolutely disastrous.”
Lew acknowledged the threat but said the US œcannot take this hard-earned reputation for granted.”
JPMorgan CEO Jamie Dimon painted a bleak picture of the days ahead if there is no resolution. œAs you get closer to it, the panic will set in and something will happen,” Mr. Dimon said.
ARA/ARA
Copyright: Press TV