IMF warns of implications of US default over debt ceiling dispute

The International Monetary Fund (IMF) has warned of the "severe repercussions" for the global economy of a possible US default, reported German news agency dpa.

"We again are calling on all of the parties to come together, reach consensus, and resolve the matter as quickly as possible," IMF spokesperson Julie Kozack said in Washington yesterday.

Her comments came against the backdrop of the ongoing dispute in Washington over the US debt ceiling. A default by the US government would have repercussions not only for the United States but for the global economy, Kozack said.

In the United States, Congress sets a debt ceiling and determines how much money the government can borrow. The debt ceiling has already been reached and the US Treasury has had to tap the capital reserves - because the US is now not allowed to take on new debt to pay its bills.

US President Joe Biden needs the Republicans in Congress to agree to raise the debt ceiling. However, the Republicans oppose an increase without significant cuts in certain government spending.

US Treasury Secretary Janet Yellen has recently warned that the US government could run out of money to pay its debts as early as June 1.

- Bernama