IMF warned, said – If America defaults, the global economy will have to bear the brunt

US Default Threat: Till now you must have heard about defaulting of Sri Lanka, Pakistan’s debt. But do you know that America, the world’s largest economy, can also default in paying the debt. This is to say of the International Monetary Fund (IMF) who has given this warning. The IMF says that if the US defaults in repaying its debt, then it will affect not only America but the entire global economy may have to bear the brunt of it.

IMF’s Communications Director Julie Kojack appealed to all parties to find a solution as soon as possible and said that we estimate that not only America but also the global economy may have to suffer bad consequences if America defaults on its debt.

In fact, Republicans and Democrats in America are divided on the level of debt. Republicans in the US Congress demand that the President Joe Biden administration agree to cut the budget in lieu of increasing the debt limit. If this does not happen, the debt crisis on America can deepen. Democrats want the debt ceiling to be increased. They are accusing the Republicans of furthering their political agenda.

The IMF cautioned that borrowing on default would be costly, as well as global instability and other economic effects could also be seen. Julie Kojack said that in the last few years the world has faced many shocks. In such a situation, any possibility of US defaulting should be avoided.

Increasing the limit of borrowing through Parliament has always been happening. It would have been necessary for the Congress to meet its spending commitments so that it could fulfill its obligations. For this approval is taken before the Parliament. But when Republicans won a small majority in the House of Representatives during last year’s midterm elections, the right wing of the caucus pressured Kevin McCarthy to tackle America’s rising debt in exchange for their support.

The Biden administration refused to negotiate on the debt limit. After which the situation of confrontation has arisen. This has instilled fear in the minds of the people that whether America will be able to fulfill its debt repayment obligations or not. However, it is believed that an attempt will be made to remove this deadlock through talks.

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