The US is at risk of defaulting as early as June, says the Congressional Budget Service

The Congressional Budget Service said on Friday that the United States could find itself in default by early June if no agreement is reached between Democrats and Republicans to raise the debt ceiling.

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The OCA, a politically independent agency responsible for providing Congress with financial and economic analysis, had previously estimated that this was likely to happen between July and September.

However, the Treasury had already mentioned a June 1 date for a possible default by the world’s largest economy, an unprecedented situation.

“If the debt ceiling remains unchanged, there is a significant risk that sometime in the first two weeks of June, the government will not be able to pay all of its obligations,” the CBO said in the report.

“The Treasury’s ability to fund ongoing government operations will remain uncertain throughout May, even if Treasury funds eventually run out in early June,” she said.

The CBO notes that “additional extraordinary measures” and tax receipts at the end of the quarter may allow the government to “finance its operations until at least the end of July.”

The debt of the world’s largest economy reached $31 trillion on January 19, the ceiling beyond which the country can no longer issue new loans to finance itself.

Temporary emergency measures have been taken to continue payment. Democrats and Republicans are engaged in a confrontation over this issue, as the Republican opposition refuses, for the time being, to raise the debt ceiling without concessions. A meeting is scheduled early next week at the White House.

But “if the debt ceiling is not raised or suspended, the treasury will not be authorized to issue additional debt other than to replace securities that have reached maturity or have been repaid,” the CBO explains.

This, the agency said, would lead to “delay in repayment of certain government activities or default on government debt obligations, or both.”

This unprecedented situation could lead to dire consequences, as the Central Bank of Oman noted “difficulties in credit markets, disruption of economic activity and rapid increases in borrowing rates for the treasury.”