U.S. Treasury warns that debt limiting mechanisms are weakening

The tools to keep the government debt at the level set by Congress are being reduced.

U.S. Treasury warns that debt limiting mechanisms are weakening

This was announced on Wednesday, May 5, by the US Treasury Department.

“In light of the significant uncertainty surrounding COVID in terms of revenue and expenditure in the coming months, it is very difficult to predict how long the emergency measures might last”, – the quarterly reimbursement statement said.

Against this background, the department warns that measures of artificial support for the economy “can be exhausted much faster” than expected.

The statutory limit on US debt repayment begins on August 1 after a two-year hiatus. While the Treasury has options to continue paying interest on the debt for some time, such as by diverting money from federal pension funds, legislative action will be vital.

According to Bloomberg, the Ministry of Finance declined to specify how long the department can continue to fund government obligations if lawmakers do not revise the debt limit by July 31. They just noted that the costs associated with the corona crisis make it especially difficult to predict these dates.

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