Credit rating agency Moody’s said that the US government shutdown will harm its sovereign rating, in a stern warning a month after Fitch downgraded the US rating one notch on the back of the debt ceiling crisis.
According to the global agency” Reuters”, US government services will be disrupted and hundreds of thousands of federal employees will be granted unpaid leave if Congress fails to provide funding for the fiscal year starting on the first of October.
Moody’s analyst William Foster said the potential shutdown would be further evidence of how political polarization in Washington is weakening the financial policymaking process as pressures on the sustainability of U.S. government debt are mounting due to rising interest rates.
He added: “If there is no effective response in fiscal policy to try to alleviate those pressures.. There will be the possibility of an increasingly negative impact on the credit situation. This could lead to a negative outlook, and possibly a downgrade at some point, if these pressures are not addressed,”he said.
Moody’s ranks U.S. government debt at Aaa with a stable outlook, the highest creditworthiness it assigns to borrowers.
Moody’s is the last major agency to maintain such a rating for the United States after Fitch downgraded the government’s rating by one notch in August to AA+, the same rating set by Standard & Poor’s global in 2011.
