Belfast Telegraph

Thursday 28 August 2014

Shutdown: US 'days' from causing worldwide economic disaster, says World Bank

Obama considering measures, but politicians must quickly come to an agreement or risk disaster

Jim Yong Kim, World Bank president, with Barack Obama
Jim Yong Kim, World Bank president, with Barack Obama

The United States is just “days away” from causing a global economic disaster unless politicians devise a plan to raise the nation’s debt limit and avoid defaulting, the president of the World Bank has warned.

The shutdown began after the two houses of Congress failed to agree a new budget, and the Republican-led House of Representatives delayed President Barack Obama's healthcare reform. On Thursday, the final details of a plan by the House of Representatives Republicans were being considered by President Barack Obama .

“We're now five days away from a very dangerous moment,” Jim Yong Kim said in a briefing on Saturday, then the 11th day of the crisis, following a meeting of the bank’s Development Committee in the US capital Washington DC.

“I urge US policymakers to quickly come to a resolution before they reach the debt ceiling deadline. Inaction could result in interest rates rising, confidence falling and growth slowing.

”If this comes to pass, it could be a disastrous event for the developing world, and that will in turn greatly hurt developed economies as well,“ stressed Kim, who has been World Bank President since 2012.

Part of the deal unveiled by John Boehner, the House Speaker, would lift the US government’s debt ceiling for six weeks, possibly ending the government shutdown that has threatened to see America default on its debts for the first time ever.

It would also see Obama agree to negotiate almost immediately on a broad set of measures to help address the county’s deficit and spending problems. 

He signed an ad hoc measure on Thursday that was approved by both chambers to restore benefits to the families of soldiers killed in action in Afghanistan, as well as giving consent to state governments to reopen national parks using their own funds.

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