U.S. Fiscal Deficit: Threat of Debt-Ceiling Crisis Intensifies

The U.S. faces rising concerns over a widening fiscal deficit and the threat of debt-ceiling crises. Scope Ratings sees a negative outlook on the country's credit rating. The presidential election outcome is crucial to averting a potential debt-ceiling crisis by early 2025.

The growing U.S. fiscal deficit has become a significant concern, with potential debt-ceiling standoffs posing risks, Scope Ratings reported. The Europe-based firm maintains a negative outlook on the U.S. AAA credit rating. An upcoming review on November 22, just weeks post-presidential election, adds urgency to fiscal management decisions.

Scope highlighted that without a unified governmental leadership post-election, the U.S. could face a debt-ceiling crisis in early 2025. Notably, the U.S. budget deficit has ballooned to $1.833 trillion for fiscal 2024, marking the highest level outside of the COVID era, according to the Treasury Department.

Despite these challenges, the IMF's fiscal chief reassured that the U.S. debt path remains sustainable amid strong growth and easing financial conditions. However, persistent budget deficits and inflationary pressures present ongoing risks. Rising interest payments and anticipated political developments under a potential Donald Trump presidency could further affect fiscal stability and U.S. institutions.

(With inputs from agencies.)