The credit watchdog maintained its highest rating of “AAA” on Wednesday (local time), but lowered its credit rating outlook to “negative”, threatening a downgrade. Fitch motivated the decision with the ongoing dispute over the increase in the debt ceiling and the imminent bankruptcy as a result. Fitch is one of the top three rating agencies alongside Moody’s and Standard & Poor’s.
According to Fitch, a resolution to the debt dispute is still expected. However, it is believed that the risk has increased that the debt ceiling will not be raised in time and that the US government will no longer meet its payment obligations. “The debt ceiling dispute and the inability of the US authorities to seriously address the medium-term fiscal challenges that will lead to rising budget deficits and rising debt burdens point to downside risks to US creditworthiness,” Fitch said.
In the United States, parliament, not the government, decides how much money the state can borrow. For weeks, Republicans and Democrats have been fighting in tough rounds of negotiations about raising the debt limit. The U.S. government is at risk of default from early June, according to Treasury Department forecasts. If it really came to that, it could lead to a global financial crisis.
In 2011, a Republican majority in the US House of Representatives delayed raising the debt ceiling for so long that the US credit rating was downgraded for the only time in history. At that time, Standard & Poor’s recognized the highest rating as “AAA” and has since given the US an “AA+” rating – ie one rating lower. (sda/dpa)
Soource :Watson
I am Amelia James, a passionate journalist with a deep-rooted interest in current affairs. I have more than five years of experience in the media industry, working both as an author and editor for 24 Instant News. My main focus lies in international news, particularly regional conflicts and political issues around the world.
