By Andrew Mills
DOHA (Reuters) – The managing director of the International Monetary Fund (IMF) Kristalina Georgieva said on Wednesday she was confident the United States would avoid a debt default.
The U.S. government could fall behind on its bills next month – and even default on its debt – if Congress doesn’t raise a $31.4 trillion cap on government borrowing, a failure that could trigger economic calamity and panic on global financial markets.
The latest round of debt ceiling talks between representatives of President Joe Biden and congressional Republicans ended without progress on Tuesday, as the June 1 deadline inched closer.
“History tells us that the U.S. would wrestle with this notion of default… but come the 11th hour it gets resolved and I have confidence we will see that play again,” Georgieva said at the Qatar Economic Forum in Doha, organised by Bloomberg.
Finance ministers from Saudi Arabia and Qatar, who joined Georgieva for the panel discussion, agreed that a resolution was needed sooner rather than later.
“I hope wisdom will prevail and prevail sooner (rather than later)… it is not easy to play with the international markets, and when they catch a cold, everybody will sneeze,” Mohammed Al Jadaan, the Saudi finance minister, said.
Georgieva said that the U.S dollar is likely to remain a global reserve currency despite increasing discussion on moves by countries to reduce their reliance on the greenback, known as “de-dollarisation”.
“We don’t expect a rapid shift in (dollar) reserves because the reason the dollar is a reserve currency is because of the strength of the U.S. economy and the depth of its capital markets…Don’t kiss your dollars goodbye just yet,” Georgieva said.
(Additional reporting by Aziz El Yaakoubi and Rachna Uppal; Editing by Toby Chopra and Bernadette Baum)