Fitch Says U.S. AAA Rating Remains on Negative Watch
By Stephen Nakrosis
Despite a deal among U.S. lawmakers to resolve the latest debt
ceiling crisis, Fitch Ratings said the U.S. AAA rating remains on
rating watch negative as the agency considers "the full
implications of the most recent brinkmanship episode and the
outlook for medium-term fiscal and debt trajectories."
On May 24, Fitch placed the U.S. ratings on rating watch
negative, citing increased political partisanship. "The
brinkmanship over the debt ceiling, failure of the U.S. authorities
to meaningfully tackle medium-term fiscal challenges that will lead
to rising budget deficits and a growing debt burden signal downside
risks to U.S. creditworthiness," Fitch said at the time.
On Friday, Fitch said despite the latest agreement, continued
political standoffs and last-minute suspension lower confidence in
governance of debt and fiscal matters.
"There has been a steady deterioration in governance over the
last 15 years, with increased political polarization and
partisanship as witnessed by the contested 2020 election, repeated
brinkmanship over the debt limit and failure to tackle fiscal
challenges from growing mandatory spending has led to rising fiscal
deficits and debt burden," Fitch said.
Strengths which support the U.S. rating, including the size of
the economy and the dollar's role as the world's preeminent reserve
currency, may be eroded over time by governance shortcomings, Fitch
The agency said it intends to resolve the negative watch in the
third quarter of this year.
Write to Stephen Nakrosis at firstname.lastname@example.org
(END) Dow Jones Newswires
June 02, 2023 13:36 ET (17:36 GMT)
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