US to default on debt by March: Report

A new official report predicts that US government may default on its debt before March 2013, prompting new pressures on ways to raise the country’s federal debt ceiling.

A new official report predicts that US government will default on its debt before March 2013, prompting new pressures on ways to raise the country’s federal debt ceiling.

According to an analysis by the Bipartisan Policy Center, the US government will not be able to pay its bills sometime between February 15 and March 1 of this year, half a month sooner than expected, The Washington Post reports on Tuesday.

The government, the report adds, already reached the USD16.4 trillion legal debt limit on December 31, 2012, “but the Treasury Department is able to undertake a number of accounting schemes to delay when the government runs into funding problems.”

The US Treasury Department has announced that the accounting plan, referred to as “extraordinary measures,” would ordinarily avert a default for nearly two months, the report adds.

However, officials have made it clear that they are unable point to a “precise date” due to “an unusual amount of uncertainty around federal finances,” the daily notes.

“Our numbers show that we have less time to solve this problem than many realize,” Senior Director of Economic Policy at the Bipartisan Policy Center Steve Bell said in a statement. “It will be difficult for Treasury to get beyond the March 1 date in our judgment.”

The report further warns that if the US Congress does not left the debt ceiling by the due deadline, Obama administration officials have said that the country will probably default on its payments.

In a previous instance in 2011 US authorities determined that the best route would be to hold back all of a given day’s federal payments until enough money became available to pay them, according to the report.

MFB/MFB