President Joe Biden on Saturday signed the bill that suspends the government’s debt ceiling until January 1, 2025, averting the first-ever US default.
In exchange for suspending the debt ceiling, the legislation agrees to cap non-military discretionary spending, recover some planned spending, expands work requirements for some federal aid programs, changes environmental review processes and ends the suspension of federal student loan payments, the White House said.
Even though the US government suspended the debt ceiling before the government ran out of money, which was expected to happen on Monday, Fitch Ratings said on Friday it was maintaining the US’ “AAA” rating on Rating Watch. Negative “until we consider the full implications of the most recent episode of the crisis and the outlook for medium-term fiscal and debt trajectories.”
The rating company, one of the three largest in the world on sovereign debt, said political stalemates around the debt limit and last-minute suspensions before the Treasury’s estimated default date “diminish confidence in fiscal and debt governance.”
If Fitch decides to downgrade its rating on the US credit rating, it could lead to higher borrowing costs for the world’s largest economy. May 24, Fitch put the United States on negative watch, putting the U.S. country in danger of losing its premier status because increased political partnership prevented reaching a resolution on the debt limit.
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