Washington The rating agency Fitch continues to threaten the world’s largest economy, the USA, with downgrading of the top rating despite an agreement in the debt dispute. The rating agency said on Friday that “repeated political standoffs around the debt ceiling” and their suspensions only “at the last minute” are weakening confidence. The credit watchdogs have now retained the top “AAA” rating for the USA, but left the outlook for creditworthiness at “negative”. The intention is to lift this, probably in the third quarter. Last week, Fitch threatened the downgrade for the first time in the course of the debt dispute.
In the USA, the parliament sets a debt ceiling at irregular intervals and thus determines how much money the state can borrow. It was only after weeks of nail-biting that US President Joe Biden’s Democrats were able to agree on a compromise with the Republicans. Without the move, the US government would have run out of money. A default by the world’s largest economy could have triggered a global financial crisis and economic downturn. The political impasse in Washington therefore also caused unrest on the stock exchanges. Late Thursday evening (local time), the US Congress approved the cross-party agreement with the final vote in the Senate.
Fitch is one of the top three rating agencies alongside Moody’s and Standard & Poor’s. Fitch now emphasizes that the agreement is positive “despite heated political arguments”. In fact, the situation in Washington has steadily deteriorated over the past 15 years due to increasing political polarization.
As early as 2011, a Republican majority in the US Parliament had delayed raising the debt ceiling for so long that the US credit rating was downgraded for the only time in history. At that time, Standard & Poor’s dropped the top rating of “AAA” and has since given the USA an “AA+” rating – i.e. one rating lower.
More: US debt dispute: Fitch threatens to downgrade the USA’s top rating