London, Oct 14: The International Monetary Fund chief Christine Lagarde has warned that a US default could tip the world into recession.
In an interview with ABC News, Lagarde said a default would result in massive disruption the world over.
According to the BBC, she said America must now raise the debt ceiling before Thursday’s deadline.
The president of the World Bank, Jim Yong Kim, has also expressed his concern over the situation.
He warned that the United States is just days away from a very dangerous moment because of the government’s borrowing crisis.
According to the report, the US government has been in partial shutdown since Congress missed a 1 Oct er deadline to pass a budget, with politicians being unable to agree funding for current spending.
This has resulted in hundreds of thousands of federal employees being sent home and government offices closing.
Republicans refused to approve the new budget unless President Barack Obama agreed to delay or eliminate the funding of the healthcare reform law of 2010.
US Treasury Secretary Jack Lew has estimated that each week the government is shut down, 0.25% is shaved off economic growth, which was already expected to be a sluggish this quarter.
Lew has also has warned that letting talks over the debt ceiling go down to the wire ‘could be very dangerous’, the report added. (ANI)