Uncertain about when Treasury will run out of funds to pay government's debts, says US Treasury Secretary Janet Yellen

Treasury Secretary Janet Yellen said there was still ambiguity about when the Treasury will run out of funds to pay the US government’s debts, but she would keep Congress updated if the date changed, which could happen as soon as 1 June. The International Monetary Fund warned of grave consequences if the United States defaulted on its debt, just days before a deadline for the country to increase or suspend its borrowing limit on Thursday. According to Julie Kozack, director of communications at the IMF, “Our assessment is that there would be very serious repercussions not only for the US but also for the global economy should there be a US debt default,” urging all parties to swiftly settle the issue. Yellen told Bloomberg TV that she will meet with senior Wall Street bankers next week to discuss the federal debt ceiling and that she thought it was acceptable for them to speak out about how the dispute over the debt limit was harming the US economy. Speaking on the sidelines of a meeting of finance officials from the Group of Seven (G7) rich nations in Japan, Yellen reiterated that failure by Congress to raise the $31.4 trillion debt limit would result in economic and financial catastrophe. Yellen told lawmakers last week that Treasury would likely be unable to pay all the government’s bills as early as 1 June without an increase in the federal debt limit. President Joe Biden’s Democrats and Republicans, who control the US House of Representatives, continue to disagree on the need to extend the debt ceiling, which represents already spent federal funds. While Republicans have attached any rise to significant budget cutbacks, Biden maintains that Congress has a constitutional obligation to raise the debt ceiling without restrictions. In light of recent developments in the debt ceiling standoff, the US president suggested this week that he might have to forgo flying to Hiroshima to meet with G7 leaders next week. After their initial meeting on Tuesday, senior Democratic and Republican congressional leaders were scheduled to meet again on Friday, but Biden has postponed that meeting until the following week. On Wednesday, Republican front-runner Donald Trump, a former US president, said that if the White House does not consent to “massive” budget cutbacks, Republicans should refuse to increase the debt ceiling. ‘Focus on getting it done’ The IMF issued a warning on Thursday about the possibility of increased borrowing rates, wider global instability, and negative economic effects in the case of a US default. “We have seen a world in the last few years that has been affected by many shocks, so we would want to avoid those severe repercussions,” Kozack added. Given that it includes generating money to pay for expenditure obligations previously made by Congress, raising the debt ceiling has traditionally been considered a normal event. Unlike most developed countries, the US sets a ceiling on how much it can borrow. Because the government spends more than it takes in, lawmakers must periodically raise that cap. Yellen dodged a question on whether Treasury would keep making payments on securities if the debt ceiling was breached - a possibility raised during an earlier debt ceiling debate. She said there was no good option other than for Congress to raise the debt limit, as it has done nearly 80 times since 1960. “We’ve not discussed what to do if that doesn’t occur with the president. Our focus is getting it done,” she said, adding that she and other government officials were “working fulltime” with Congress on increasing the federal borrowing limit. Yellen said Treasury might be able to provide more refined guidance on exactly when it would run out of cash to pay the government’s bills as the date neared. “There remains a level of uncertainty about precisely when we would run out of cash to pay the government’s bills,” she said, citing some uncertainty about the level of cash balances and day-to-day payments that Treasury needed to make. German Finance Minister Christian Lindner on Friday told reporters he hoped US politicians would come to a “grown-up” decision to raise the federal debt ceiling, warning there was a risk to the global economy if they did not. Lindner said the global economic outlook was still “fragile” and he hoped the parties would not be driven by partisanship. “That’s why we’re looking at the United States in particular these days and hoping that an adult decision will be made with regard to the development of American government finances and the associated effects on the global economy,” he said. Read all the Latest News , Trending News , Cricket News , Bollywood News , India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.