President Joe Biden and House Speaker Kevin McCarthy have reached a “tentative” agreement on raising the debt ceiling, following a lengthy phone call on Saturday evening, according to US media reports.
The “framework deal” was negotiated in “extended discussions,” but has yet to be pushed through Congress, amid objections from hardline lawmakers in both the Republican and the Democrat parties, Bloomberg reported citing people familiar with the talks.
Biden and McCarthy spoke over the phone for over 90 minutes, in an attempt to hammer out a compromise on federal borrowing cap and government spending cuts. An all GOP House conference call about the progress in negotiations was scheduled later on Saturday, according to Fox News sources.
US Treasury Secretary Janet Yellen said on Firday, that the government could run out of money by June 5, and would not be able to fulfill its obligations in full. Economists warned that if no agreement is reached in time and the US defaults even on some of its bills, it could trigger a market crash and damage confidence in the dollar over the longer term.
The managing director of the International Monetary Fund (IMF) Kristalina Georgieva criticized Washington’s debt-ceiling impasse, saying a US default would have a significant ripple effect on the world’s economic prosperity.
“The US Treasury market is the anchor of stability for the global financial system,” Georgieva said at a press conference on Friday following the IMF’s Article IV consultation with US economic figures. “You pull the anchor and the world economy – this ship on which we all travel – is in choppy, and, even worse, uncharted waters.”
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