WASHINGTON – World finance officials said Friday the United States needs to take urgent action to address its budget problems that are creating economic uncertainties for the global economy.
Finance ministers and central bank leaders for the Group of 20 major economies wrapped up two days of discussions in Washington with a joint statement expressing concern about the ongoing budget stalemate between Congress and the Obama administration.
Russian Finance Minister Anton Siluanov told reporters at a news conference that issues of the partial government shutdown, and the need to raise America’s borrowing limit before a Thursday deadline, were addressed by Treasury Secretary Jacob Lew. Federal Reserve Chairman Ben Bernanke also participated in the talks.
Siluanov said all the G-20 participants are hoping for a speedy resolution. He noted that about 45 percent of Russian foreign exchange reserves are invested in U.S. Treasury securities. America will run out of borrowing authority for new debt on Thursday.
Lew has warned that with only $30 billion expected cash on hand at that time, the country will soon not have the ability to meet all of its bills, including paying interest on the $16.7 trillion federal debt. That would trigger an unprecedented default on U.S. debt.
Underscoring the urgency of the situation, Lew left the G-20 discussions before they had wrapped up Friday to get to the White House for a meeting with President Barack Obama and Senate Republicans.
There have been various proposals in recent days to resolve the impasse and get at least a short-term increase in the borrowing limit approved before next week’s deadline. Obama has insisted he will not negotiate with Republicans over spending issues until the government is reopened and the borrowing limit is raised.
Siluanov said the G-20 officials did not discuss contingency plans if the U.S. borrowing ceiling is not increased by the Thursday deadline. He had told reporters after a G-20 dinner meeting the previous evening that U.S. officials had given assurances that the debt ceiling would be resolved before the deadline. However, U.S. officials said Friday that they didn’t provide such an assurance but merely expressed the hope Congress would act.
There are no emergency or extraordinary plans, Siluanov said. In the course of today’s meeting, no plans were drawn up. No worst-case scenario was discussed. We trust the U.S. authorities will find a way out of this complex situation.
Siluanov said that Russia was not considering reducing the size of its U.S. Treasury holdings, saying those investments were for the long term while the debt crisis was a short-term issue.
Other finance officials expressed similar optimism, some noting that this would not be the first time the United States has come to the brink of a default crisis and a solution has been found at the last minute.
Japan’s Finance Minister Taro Aso told reporters at a news conference that he conveyed to Lew his country’s expectation the debt ceiling would be extended soon, once and for all without any delay.