Moody’s warns of a ‘possible closure’ to the US

The international credit rating agency Moody’s stated that the possible shutdown of the federal government in the US will have negative effects on credit evaluation.

Moody’s statement said the US federal government appears likely to enter a partial shutdown if a bill to fund public institutions is not passed before the end of September.

The statement assessed how the potential shutdown would affect the U.S. economy and the country’s credit profile, and also included which sectors would be most affected by the shutdown.

The statement stated that the economic impact of the shutdown will likely be short-lived and will have limited consequences on the overall U.S. economy and gross domestic product growth.

The statement noted that most of the impact on consumption will be temporary and will reverse when the government reopens, but noted that if the shutdown lasts a long time, the effects on the broader economy will be negative.

The statement emphasized that a prolonged shutdown would likely be “devastating” to both the U.S. economy and financial markets.

The statement states that the closure would create a negative situation for the United States in terms of credit, and that although a short-term closure is unlikely to disrupt the economy, this situation would underline the weakness of institutional and governance power. of the United States, which has been emphasized in recent years.

The closure will likely have the greatest consequences for organizations whose revenue or debt payments depend on federal funds and those that are highly exposed to the Washington, D.C., area economy, according to the statement.

WHAT DOES ‘FEDERAL GOVERNMENT SHUTDOWN’ MEAN?

Under US law, if Congress cannot timely approve the budget covering the entire fiscal year, which begins on October 1 and ends on September 30 of each year, the period until this happens must be covered by temporary budgets.

During periods when a temporary budget cannot be passed, the federal government, having lost its spending authority, is forced to suspend all activities except vital services.

In this process, while non-essential public employees receive mandatory leave, public employees such as the US military, intelligence agencies, doctors and nurses working in public hospitals, security guards at airports and prisons continue their duties.

These employees, who are in the “essential personnel” category, generally do not receive their salaries during shutdown periods until Congress passes a new budget. (AA)