The head of the International Monetary Fund, Kristalina Georgieva, pressed US authorities to move quickly on a potential default issue, stressing that delaying action only heightens global risk. Her remarks underline the view that the US Treasury market remains a core pillar of global financial stability, and a default could unsettle markets worldwide.
Georgieva indicated that a resolution will eventually be found, but she criticized the political dynamic that keeps pushing a solution to the last minute. She likened the situation to a familiar fairy tale, noting that the moment of truth could arrive when the proverbial clock strikes midnight and a dangerous transformation occurs, much like a pumpkin turning into a carriage in a well-known story.
Earlier reporting suggested that the pool of funds available to the US Treasury to service rising debt levels has dwindled to its lowest point in six years, a sign that authorities may face increasing difficulty in meeting debt obligations if the situation worsens. This financial constraint adds urgency to the debate over how and when to resolve the debt situation.
Additionally, a White House Council of Economic Advisers analysis warned that a default scenario could trigger a significant market downturn. In such a scenario, the stock market could experience a sharp decline, and the economy could contract meaningfully, with job losses a possible consequence for millions of workers. Analysts emphasize that the depth of the impact would depend on how markets and policymakers respond, and the timing of any resolution would be critical to limiting damage.