The head of the US Treasury said that the default in the country may occur on June 5

The US Treasury has changed the expected deadline for the government’s default on obligations from June 1 to June 5. This follows from a letter from United States Secretary of the Treasury Janet Yellen to the leaders of the country’s congress.

Thus, the US is likely to default on June 5, and not on June 1, as previously predicted.

“Based on the latest available data, we now expect the Treasury to have insufficient resources to fulfill government bonds on June 5 unless Congress raises or suspends the debt limit.”the letter says.

The head of the US Treasury called on the United States Congress to resolve the issue of the national debt ceiling as soon as possible.

Yellen has repeatedly noted in the past that the United States is capable of defaulting on June 1st.

The threat of default in the US

In January, the United States exceeded the $31.4 trillion ceiling on public debt, which forced the Treasury to use emergency measures to continue financial operations. US President Joe Biden has repeatedly demanded an expansion of debt limits without conditions. Republicans, who control the lower house of Congress, attribute the increase in the ceiling to the adoption of a program of radical budget cuts, which the White House does not agree with.

If lawmakers don’t agree to raise the ceiling soon, and the government exhausts its borrowing capacity by early June, it threatens to halt payments that millions of Americans rely on. According to Moody’s Analytics experts, the macroeconomic consequences of a default can be catastrophic for stock exchanges and economies of different countries, they draw analogies with the 2006 crisis. Analysts believe that under such a scenario, the United States GDP will decrease by 4%, about 6 million people may lose their jobs. But experts consider such a negative scenario unlikely.

Nevertheless, US Treasury Secretary Janet Yellen warned that the deadline for raising the debt ceiling is the first half of June.

US President Joe Biden during a press conference at the G7 summit in Hiroshima said that the default could be “provoked” by the Republicans. At the same time, the owner of the White House is studying the possibilities in order to avoid default on debt obligations.

Biden also said that America will avoid default. According to Reuters, Biden managed to solicit a trillion-dollar increase in the national debt ceiling. However, the deal contains restrictions on certain items of expenditure, which means that the president will not be able to spend money on whatever he wants.