Dear Editor,
The world’s attention has been focusing on the US Capital (Congress) on the debt ceiling because if the borrowing debt is not increased by Monday, June 5 there will be international implications including for small economies like Guyana and other CARICOM states.
The world’s economy is tied to the US. Every country, every banking system, every international financial institution will be affected. The US debt ceiling must be increased. Only Congress can increase the debt ceiling. The White House or President (Democrat) and the Speaker (Republican) of the House (majority Republicans) reached an agreement over the weekend to increase the debt ceiling by US$2 trillion beyond the current US$38.3T debt. However, the Speaker faces rebellion from among dozens of members of his party opposed to any deal without cuts in hundreds of billions annually over the next few years. The Senate, narrowly controlled by Democrats, will approve whatever debt limit bill the House sends to it. The Speaker is likely to get most Democrats to support the agreement he made with President Biden.
The debt ceiling must be extended by June 5 when the US government runs out of money to pay bills. If the debt ceiling is not increased by that date, it is unclear what happens as it is unchartered waters (never happened before). But for sure, it will shake up the global financial institution. It will also erase hundreds of billions if not trillions in stock value. Just last week, tens of billions of dollars were wiped out from the value of stocks when the White House and Republican leaders were having difficulties in reaching a deal. The Republicans want major cuts in expenditures of almost one trillion dollars in exchange for increasing the debt limit. Biden is opposed.
Sincerely,
Vishnu Bisram
