World Bank warns US of impending financial crisis
The president of the World Bank, Jim Yong Kim, has warned that the United States is just “days away” from causing a world economic disaster if politicians don’t reach a deal to increase the nation’s debt ceiling.
He urged US democrats and republicans to negotiate a deal before Thursday’s deadline in order to prevent the country from defaulting and to avoid a “disastrous event” for the world.
“We’re now five days away from a very dangerous moment,” Jim Yong Kim said in a briefing on Saturday following a meeting of the bank’s Development Committee in the US capital Washington DC.
“I urge US policymakers to quickly come to a resolution before they reach the debt ceiling deadline. Inaction could result in interest rates rising, confidence falling and growth slowing. If this comes to pass, it could be a disastrous event for the developing world, and that will in turn greatly hurt developed economies as well,” stressed Kim.
The US government has been in partial shutdown since Congress missed a 1st October deadline to pass a budget with politicians being unable to agree funding for current spending.
Republicans refused to approve the new budget unless President Obama agreed to delay or eliminate the funding of the healthcare reform law of 2010.
The current debt limit of $16.699 trillion was reached in May and The White House rejected a deal for a short-term increase to the borrowing limit.
“It wouldn’t be wise, as some suggest, to just kick the debt ceiling can down the road for a couple of months, and flirt with a first-ever intentional default right in the middle of the holiday shopping season,” said President Barack Obama.