The IMF warned that a US debt default would have “serious repercussions” globally

FILE PHOTO. US dollar bills are seen in this illustration taken on March 10, 2023. REUTERS/Dado Ruvic/Illustration (DADO RUVIC/)

The International Monetary Fund warned of “very serious repercussions” for the United States and the world economy if the nation defaults on its debt.urging Democrats and Republicans to reach a consensus on the debt limit.

Possible consequences of a US default would include higher interest rates and broader instability, IMF spokeswoman Julie Kozack said at a briefing on Thursday. That would add to the difficulties of recent years, she said, including the Covid-19 pandemic and the war in Ukraine.

The US discussions are taking place at a very difficult time for the global economy“, said.

“Our assessment is that there would be very serious repercussions, not only for the US but also for the world economy, in the event of a US debt default. And we strongly encourage the parties in the US to come together to reach a consensus to urgently address this matter,” she added.

President Joe Biden and congressional leaders are scheduled to meet on Friday to discuss the debt issue, following a meeting they held on Tuesday.

FILE PHOTO.  A cyclist passes the Capitol building in Washington, DC, U.S., January 3, 2023. REUTERS/Jon Cherry
FILE PHOTO. A cyclist passes the Capitol building in Washington, DC, USA, January 3, 2023. REUTERS/Jon Cherry (JON CHERRY/)

US Treasury Secretary Janet Yellen warned this week that a default “would cause a global recession” and that it “would also risk undermining US global economic leadership and cast doubt on our ability to defend our national security interests.”

Rising interest rates have already hurt some countries, especially those with debt problems and vulnerabilities, Kozack said. The IMF estimates that 15% of low-income countries are debt-stressed and 45% are at risk of being so, and they already forecast global growth over the next five years to be the weakest in more than three decades. .

The US government hit the legal limit on lending in January and the Treasury has been using special accounting measures ever since. Yellen has told Congress those measures could run out on June 1.

(With information from Bloomberg)

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