DOHA: Managing Director of International Monetary Fund (IMF) Kristalina Georgieva said she was confident United States would avoid debt default. US government could fall behind on its bills next month and even default on its debt if Congress doesn’t raise a $ 31.4 trillion cap on government borrowing, failure that could trigger economic calamity and panic on global financial markets.

Latest round of talks on debt ceiling between representatives of President Joe Biden and congressional Republicans ended without progress, as June 1 deadline inched closer.

“History tells us that US would wrestle with this notion of default but come 11th hour it gets resolved and I have confidence we will see that play again,” Georgieva said at Qatar Economic Forum in Doha, organised by Bloomberg. Finance ministers from Saudi Arabia and Qatar who joined Georgieva for panel discussion agreed that resolution was needed sooner rather than later.

“I hope wisdom will prevail and prevail sooner (rather than later)... it is not easy to play with international markets and when they catch cold, everybody will sneeze,” Mohammed Al Jadaan, Saudi Finance Minister said. Georgieva said that US dollar is likely to remain global reserve currency despite increasing discussion on moves by countries to reduce their reliance on greenback, known as “De-dollarisation”.

“We don’t expect rapid shift in (dollar) reserves because reason dollar is reserve currency is because of strength of US economy and depth of its capital markets. Don’t kiss your dollars goodbye just yet,” Georgieva said.

Published in The Daily National Courier, May, 25 2023

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