Moody's downgrades public debt outlook to negative, Ministry of Finance reacts in opposite way

On November 10, Moody's downgraded the outlook for US public debt from "stable" to "negative", although it maintained the country's highest rating of AAA. The US Treasury Department immediately voiced its opposition to this decision.

Nền kinh tế Mỹ đang bỏ xa châu Âu như thế nào?

Credit rating agency Moody's on November 10 downgraded the outlook for US public debt from "stable" to "negative".

Moody's made the decision when forecasting that the US budget deficit will remain very large, significantly reducing the ability to pay debt when the US has not had effective fiscal policy measures to reduce spending or increase government revenue in the context of high interest rates.

The US Treasury Department immediately voiced its opposition to Moody's decision. US Deputy Treasury Secretary Wally Adeyemo issued a statement affirming that the economy remains strong and that stocks remain a safe, liquid investment asset.

Mr. Adeyemo mentioned that the US government has fulfilled its commitment to ensure financial sustainability, including reducing the deficit by more than $1,000 billion in the agreement to raise the public debt ceiling in June as well as budget proposals to reduce the deficit by nearly $2,500 billion over the next decade.

The US budget deficit for fiscal year 2023, which ends on September 30, has increased to $1.7 trillion. As the US Federal Reserve (Fed) raises interest rates to curb inflation, US borrowing costs have skyrocketed, causing the US to incur $162 billion more in interest in fiscal year 2023 than in fiscal year 2022.

Of the three credit rating agencies, Moody's is the only one that still maintains the highest rating on US public debt. In August 2023, Fitch downgraded the country's rating from -AAA to AA+, while Standard & Poor's has rated it AA+ since 2011.

Neither the Democratic-controlled Senate nor the Republican-led House of Representatives have passed a bill to extend government funding, which is set to expire at midnight on November 17. Without a deal by then, the US will be plunged into a government shutdown.

Source