The rating agency Fitch Ratings set Wednesday to United States on watch before the possibility of a rating downgrade due to the risk of defaultin the middle of a government deadlock on raising the national debt limit.
Fitch said the AAA rating “reflects the increased political partisanship that is hampering the achievement of a resolution to raise or suspend the debt limitbefore an impending deadline.
The US Treasury Department has said that the June 1 is the “date X” in which the government will run out of money, triggering a default with likely devastating economic consequences.
“Fitch continues to await a resolution of the debt limit issue before the X date,” the agency said in a statement.
“However, we believe that the risks have increased that the debt limit will not be raised or suspended before date X and, consequently, that the government may start to default on some of its obligations.”
President Joe Biden has been in tense talks for months with the Republican opposition in Congress, which has said it will only agree to raising the debt limit in exchange for major spending cuts.
Republicans, increasingly dominated by a faction of the right loyal to former President Donald Trump, have decided to use this usually routine procedure as a means to force Biden to cut healthcare and other social programs.
The Biden administration said Wednesday that it still sees a path toward an understanding, although there were no concrete signs that either side was moving toward an agreement.
With information from AFP
