2023-05-27 10:25:26
Dhe head of the International Monetary Fund, Kristalina Georgieva, has sharply criticized the USA for delaying a possible agreement in the debt dispute until the last minute. “We’ve all read the fairy tale Cinderella, which has to leave the ball at exactly midnight. And we’re at that point,” Georgieva said during the presentation of the organization’s country report in Washington. “So, before our carriage turns into a pumpkin, could we please solve the problem. It’s not just the loss of a shoe that we’re dealing with.”
The stability of the global financial system is at stake, warned the head of the IMF. It is “frustrating” that an agreement on raising the debt ceiling is being waited until the last minute. “History has shown that we came to the edge of the abyss and then found a solution and in that sense there is relative calm,” she added, referring to the financial markets.
For weeks, Democrats and Republicans have been arguing in tough rounds of negotiations about raising the debt limit. In the United States, Parliament decides the maximum amount of money the state can borrow. According to forecasts by the Ministry of Finance, an unprecedented government default is imminent from the beginning of June. It is unclear when and if the two parties will come to an agreement in the dispute.
The IMF went on to stress that robust demand and the strong labor market are something of a “double-edged sword” for the US economy. “They certainly buoyed American families, but they also contributed to persistent inflation,” Georgieva said.
The IMF therefore predicts that the key interest rate will remain above five percent until the end of 2024. The American government must also do more to reduce the public debt burden. There must be both tax increases and the elimination of “structural imbalances” in certain social programs.
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