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Top IMF official slams US government for global ‘anxiety’ caused by debt ceiling stand-off
- Should Joe Biden and Republicans fail to reach a deal, default would inflict ‘shock upon shock upon shock’ on economies hit by Covid-19, Ukraine war
- US Treasury Secretary Janet Yellen moves ‘X-date’ out to June 5 from June 1
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Robert Delaneyin Washington
The International Monetary Fund’s managing director slammed the US government on Friday for sending the world into a state of “anxiety” because of the debt ceiling stand-off between President Joe Biden and the country’s Republican Party.
Calling the US economy “the ship on which we all travel”, Kristalina Georgieva said she was constantly fielding questions in the international arena about the consequences of a possible US default.
“The US Treasury market is the anchor of stability for the global financial system,” she said. “You pull the anchor and the world economy – the ship on which we all travel – is in choppy, and, even worse, uncharted waters.”
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A default would “inevitably” lead to a contraction for the US and world economies, Georgieva added, inflicting “shock upon shock upon shock” on economies that have only recently begun to recover from the coronavirus pandemic and made vulnerable to Russia’s war against Ukraine.
Talks on the debt limit impasse between the White House and Republican House Speaker Kevin McCarthy have dragged on for the past week, with both sides signalling progress but not yet reaching an agreement ahead of the so-called “X-date” when the US Treasury would run out of funds to pay its obligations in full.
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US Treasury Secretary Janet Yellen on Friday moved that date out to June 5 from an earlier estimate of June 1.
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