The international credit rating agency Fitch Ratings reported that the debt limit law agreed in the US did not address significant financial difficulties.

Fitch made a statement regarding its special report on the US debt limit agreement.

The statement said that despite modest spending cuts in the Congress-passed Fiscal Responsibility Act, known as the “debt limit deal,” the US fiscal deficit is expected to continue to widen.

According to Fitch’s latest forecast, the US general government debt to gross domestic product (GDP) ratio is expected to top 118 percent by 2025, an increase of about 6 percentage points compared to 2022. .

THE PUBLIC DEFICIT IS EXPECTED TO INCREASE 2.6 POINTS

“However, the spending measures were largely limited to discretionary spending, limiting their overall impact,” the statement said, noting that the passage of the Fiscal Responsibility Law helped reach an agreement to suspend the debt limit. until January 2025.

It is reported that this year’s general government deficit is expected to rise to 6.3 percent of GDP with an increase of 2.6 points compared to 2022, and this rate will increase to 6.6 percent in 2024 and 6 .9 percent in 2025. It is expected to be published.

In the statement, it was emphasized that high interest rates fuel interest expense, noting that the general government interest-to-revenue ratio, which was 7 percent last year, is expected to rise to 10 percent. percent in 2025.

‘THE DEBT RATIO HAS BEEN DIFFICULT TO STABILIZE’

It was also unclear whether some existing tax cuts and spending limits will be extended beyond their planned end dates, highlighting that there is little sign of a deal any time soon to further address risks to public finances.

The reluctance to raise taxes or cut spending has made it difficult to stabilize the general government debt ratio, the statement said. (AA)