The Fitch agency has lowered this Tuesday the rating of the debt of the United States to the AA + level, one point below the highest note. The decision comes three months after placing the rating on “negative watch” due to delays in the negotiation of the debt ceiling. The agency has referred in a statement to the “expected fiscal deterioration” over the next three years and the “increasingly high” debt of the US government among the reasons for which it has made the decision.
“In Fitch’s opinion, governance standards have deteriorated over the past 20 years, including on debt and fiscal matters, despite the bipartisan agreement in June to raise the debt ceiling,” the agency said. Thus, the repeated confrontations over the debt ceiling have deteriorated confidence in the country’s fiscal management, the agency says. The US Treasury Secretary, Janet Yellen, issued a statement criticizing the decision, assuring that it is based on “outdated data”.
“Fitch’s decision does not change what Americans, investors and people around the world already know: that Treasuries are the preeminent safe and liquid asset, and that the US economy is fundamentally strong,” Yellen says. The head of the Treasury also defended the economic policies of the Joe Biden Administration and assured that his budget would reduce the deficit by more than 2,000 million dollars.
At the same time, White House spokeswoman Karine Jean-Pierre highlighted in a statement that “the ratings model used by Fitch worsened under President Trump and then improved under President Biden.” “It defies reality to lower the rating of the United States at a time when President Biden has brought the strongest recovery of any major economy in the world,” criticized the spokeswoman, who attributed the main economic risks to the “extremism” of the Republicans .
This Tuesday’s decision began to take shape in May, when Fitch put the US credit rating under negative observation. Then Democrats and Republicans seemed unable to agree to raise the debt ceiling – the legal limit to the money the country can borrow – which can only be changed by Congress. Finally, the White House reached an agreement with the Republicans in the Lower House to suspend the debt ceiling until 2025 in exchange for capping public spending. In 2011, a very similar situation resulted in the reduction of the country’s credit rating by the risk agency Standard & Poor’s from “AAA” to “AA+”.
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