2023-05-13 11:04:03
According to the Director of Communications of the International Monetary Fund (IMF). there could be serious consequences for the United States and the world economy if the US does not pay its obligations from June 1. According to director of communications Julie Kozack, the parties urgently need to negotiate in order to resolve the situation.
The confrontation between the US government and Congress could create a serious situation
Kozack spoke about this at a press conference on May 11. He emphasized that such an American move would be an incredible blow to the world economy, especially to developing markets. That’s why the IMF called on the parties to resolve the debt ceiling crisis between the White House and Congress. Even before the United States defaults on June 1st. Such a situation would have many serious consequences, such as soaring interest rates or increasing instability worldwide. And since the world has already seen some serious disasters in recent years, everything must be done to avoid them. Back in April, the Valutaalap announced that the growth rate of global output will decrease to 2.8% by 2023, compared to the 3.4% growth experienced the previous year. By 2024, however, the rate of growth is expected to return to above 3%.
On the other hand, if the United States cannot resolve its debt ceiling dispute, global growth could shrink to as little as 1%. This, for example, can also cause the collapse of bank lending. The starting point of the whole story is that the US Treasury Secretary warned me earlier. The government won’t pay its bills on June 1 unless Congress raises the debt ceiling before then. The IMF’s communications director also briefly touched on the American bank failures. He said about them that, according to the IMF, the transition from low interest rates to high interest rates took place very quickly, and some banks could not handle this rapid transition.
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