The IMF calls that the US debt default will have a serious impact on the global economy

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Tribunnews reporter, Mikael Dafit Adi Prasetyo

AMPONTOONS.COM, WASHINGTON – The International Monetary Fund (IMF) has said a US debt default triggered by a failure to raise the sovereign debt ceiling would have “very serious repercussions” for the US economy and the global economy, possibly including borrowing costs higher.

IMF spokeswoman Julie Kozack also stressed that US authorities pay attention to new vulnerabilities in the US banking sector, including regional banks that could emerge in an adjustment to a much higher interest rate environment.

Read also: US and China debt swells, IMF warns its impact could trigger a global economic crisis

“We want to avoid this serious impact,” Kozack said.

“And because of this, we are once again calling on all parties to come together, reach a consensus and resolve this issue as soon as possible,” he continued.

However, he was unable to estimate how large the impact of the US default would be on global economic growth.

In April, the IMF forecast global economic growth of 2.8% this year, but said a deeper turmoil in financial markets, marked by a steep decline in asset prices and sharp cuts in bank lending, could push output growth back to 1.0%.

Talks on raising the US government debt ceiling by $31.4 trillion began Wednesday (10/5/2023), with Republicans continuing to push for spending cuts, a day after President Joe Biden and Republican Kevin met on the issue for the first time. in three months.

Read also: Economists say foreign capital will flow out of Indonesia’s financial markets if America defaults on debt

On the turmoil in the US banking sector, Kozack said the IMF welcomed “decisive” action by US regulators and policy makers to address the failures of three major US regional lenders in recent weeks.

Kozack added that the IMF will soon conduct an annual “Article IV” review of US economic policy, to be released in late May.

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