U.S. Treasury Secretary Janet Yellen has cautioned that U.S. will reach its statutory debt limit on Thursday, January 19 in a letter to congressional leaders.
Her letter stated “Once the limit is reached, Treasury will need to start taking certain extraordinary measures to prevent the United States from defaulting on its obligations”.
The letter also stated that the treasury doesn’t have exact estimates for how long they could honour the governments obligations, but they are at least estimated to last till early June.
The newly elected Republican house is threatening to use the debt ceiling to demand spending cuts from the Biden administration.
“The use of extraordinary measures enables the government to meet its obligations for only a limited amount of time”, Yellen has written in her letter.
The secretary has warned that, “failure to meet the government’s obligations would cause irreparable harm to the US economy, the livelihoods of all Americans, and the global financial stability”.
U.S. is an important player in the global market and the dollar is base of financial payments across the globe. Loss of faith in the dollar will cause an unprecedented scenario in the global economy which will have implications on the World.
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