IMF urges urgent resolution of U.S. fiscal standoff
WASHINGTON Oct 9 (Reuters) - Politicians in Washington should urgently work on finding a solution to a budget impasse that has partially shut down the U.S. government and raised the risk of a default, a senior International Monetary Fund official said on Wednesday.
IMF deputy managing director Min Zhu said while he did not believe the world's largest economy would default on its debt, the uncertainty surrounding the borrowing limit was hurting both U.S. and global financial markets.
"We don't see a default, the chances are very slim. If that were to happen, it would have an impact on the U.S. and world markets. We don't want to see that," said Zhu in response to a question during a discussion on frontier economies.
"We encourage both parties to solve this issue as soon as they can. Markets are very concerned about this. It is important for them to reduce the uncertainty as it will subdue global growth."
The fiscal stalemate has kept the federal government shut for nine days, fanning fears of failure to raise the country's $16.7 trillion borrowing limit when it is breached on Oct. 17.
A debt default would have devastating effects on the U.S. economy, which economists had widely expected to gain momentum in the second half of the year after only expanding 1.8 percent in the first six months.
That will have ripple effects on the rest of the world.
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