Tuesday, January 29, 2013

Fitch commented the situation with the U.S. fiscal cliff

Suspension of the debt ceiling in the U.S. in the short term eliminates the risks a downgrade of the country located at the highest possible level of AAA, announced on Monday by the international rating agency Fitch Ratings.

In mid-month, the agency reported that the delay in raising debt limit would lead to an official review of the U.S. sovereign rating.

According to a press release from Fitch on January 28, in the absence of crisis threat funding of the federal government, Congress and the U.S. administration will be able to discuss the issues of fiscal consolidation in the medium and long term.

If the parties can develop a solid plan of fiscal consolidation, the U.S. AAA rating is likely to be confirmed, and the outlook revised from "negative" to "stable." But in the absence of compromise Fitch will probably downgrade the U.S. for 2013.

As reported last week, the House of Representatives of the U.S. Congress approved a bill that eliminates the need until May 19 to raise the U.S. debt limit.

The upper limit of U.S. debt was introduced in 1939 and became a regular sticking point in discussions of Republicans and Democrats.

The last time it rose to $16.394 trillion. The U.S. federal government has reached this level at December 31, 2012, but due to extraordinary measures Treasury Department freed the order of $200 billion for the current needs.

Recall the recent Treasury Secretary Timothy Geithner said that if Congress does not agree on the debt ceiling soon, by mid-February the U.S. expects a default.

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