Thursday 18 July 2019

Fed Chair and US Treasury say debt impasse to end by October 17

Ben Bernanke
Ben Bernanke

Lidia Kelly

U.S. Treasury Secretary Jack Lew and Federal Reserve Chairman Ben Bernanke told officials of other G20 economies on Thursday that the standoff over the U.S. debt ceiling will be resolved before an Oct. 17 deadline, Russia's Finance Minister Anton Siluanov said.

The U.S. Treasury has said it could quickly run out of cash if the cap on U.S. borrowing authority is not raised by Oct. 17.

"Colleagues from the U.S. Treasury and the Federal Reserve have said that they hope to solve the issue soon. They said that the problem will be solved by the 17th," Siluanov told reporters after a G20 dinner on the sidelines of the International Monetary Fund and World Bank autumn meeting.

U.S. President Barack Obama and Republican congressional leaders have been locked in battle that has already shuttered much of the U.S. government, and that risked throwing the nation into default.

Republicans have planned to use the need to raise the nation's $16.7 trillion debt limit to force changes in Obama's signature health care law or to extract spending cuts from the White House.

Siluanov said worries about what the impasse could mean for the world economy were shared by the G20, and that the group's communique to be issued on Friday will refer to the topic.

"There will be a general wish for a fast solution of the problem. There will be a couple of propositions - that we are of course, concerned and that we wish for a speedy resolution of the situation," Siluanov said.

"It's an important issue for everyone. Both Lew and Bernanke believe that these difficulties can be overcome soon."

There were signs of a breakthrough in the debt standoff on Thursday as Republicans presented a plan to extend the nation's borrowing authority for several weeks, which would give both sides more time to reach a longer-term agreement.

"The emerging trends of growth in America are the engine for other countries," Siluanov said. "So if the uncertainty continues, the growth rate will slow down. This does not benefit anyone."

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