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Montevideo, October 6th 2024 - 01:44 UTC

 

 

Fitch warns of US triple A rating downgrade if policy makers fail on budget cuts

Tuesday, November 29th 2011 - 02:09 UTC
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The super-committee of six Democrats and six Republicans could not agree on a deficit reduction The super-committee of six Democrats and six Republicans could not agree on a deficit reduction

Fitch Ratings on Monday warned it may cut the United States' AAA rating if policymakers fail to agree in 2013 on a plan to reduce the country's ballooning budget deficits.

The ratings agency revised to negative from stable the outlook on the US credit rating after a special congressional committee failed last week to agree on at least 1.2 trillion dollars in deficit-reduction measures.

“The negative outlook reflects Fitch's declining confidence that timely fiscal measures necessary to place US public finances on a sustainable path and secure the United States AAA sovereign rating will be forthcoming,” the ratings agency said in a statement, adding that the chances of a downgrade is “slightly greater than 50% now”.

The so-called “super-committee” of six Democrats and six Republicans last week said they couldn't agree by their deadline on deficit reduction, setting in motion automatic cuts that should result in lowering the deficit by 1.2 trillion dollars over 10 years. The cuts are designed to be split evenly between domestic and military programs.

The committee failure made it unlikely that any meaningful deficit plan will be adopted next year, increasing the fiscal burden on the next administration that will be elected in late 2012, Fitch said.

The news had little market impact, as a negative outlook from Fitch was widely expected.
 

Categories: Economy, Politics, United States.

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