US Warned Debt Standoff Could Hit Credit Rating

Ratings agency Fitch put the United States on notice Wednesday that its perfect credit rating could be jeopardised if the White House and Republican opposition fail to overcome their impasse on raising the nation's borrowing limit, a week before a key deadline.

Fitch placed the country's AAA-ranked credit on "rating watch negative" – a move it said "reflects increased political partisanship that is hindering reaching a resolution to raise or suspend the debt limit" before June 1.

That is the "X-date" when the US Treasury Department says that – short of an agreement – the government will run out of money, triggering a default with likely devastating economic consequences for the United States and potentially worldwide.

"Fitch still expects a resolution to the debt limit before the X-date," Fitch said in a statement. "However, we believe risks have risen that the debt limit will not be raised or suspended before the X-date and consequently that the government could begin to miss payments on some of its obligations."

The Treasury stressed that Fitch's move should serve as a wakeup call.

"Tonight's warning underscores the need for swift bipartisan action by Congress to raise or suspend the debt limit and avoid a manufactured crisis for our economy," Treasury spokesperson Lily Adams said in a statement.

And the White House urged Republicans to come to their senses.

"This is one more piece of evidence that default is not an option and all responsible lawmakers understand that," it said in a statement. "It reinforces the need for Congress to quickly pass a reasonable, bipartisan agreement to prevent default." (AFP)