Arab Today, arab today fitch confirms us aaa rating with a stable outlook
Last Updated : GMT 13:25:31
Arab Today, arab today
Arab Today, arab today

Fitch confirms US AAA rating, with a stable outlook

Arab Today, arab today

Arab Today, arab today Fitch confirms US AAA rating, with a stable outlook

Washington - AFP

Fitch confirmed on Tuesday its triple-A rating of the United States but warned the country\'s medium-term debt profile appears \"at the limit\" of what would merit its top credit grade. The agency also said the deterioration of the economy or the failure of a special congressional committee to slash fiscal deficits could lead to a reassessment of the rating and a possible cut by the end of the year. \"The affirmation of the US \'AAA\' sovereign rating reflects the fact that the key pillars of US\'s exceptional creditworthiness remain intact: its pivotal role in the global financial system and the flexible, diversified and wealthy economy that provides its revenue base,\" Fitch Ratings said. \"Monetary and exchange rate flexibility further enhances the capacity of the economy to absorb and adjust to \'shocks,\'\" Fitch said, praising the US economy as one of the most productive and business friendly in the world. \"Fitch continues to forecast that the US economy (and tax base) will, over the medium term, be one of the most dynamic amongst its high-grade and \'AAA\' peers,\" it said. But it also highlighted the problems singled out by rival rating agency Standard & Poor\'s when it dealt the country its first-ever downgrade on August 5. \"The fiscal profile of the US government has deteriorated sharply and is set to become an outlier relative to \'AAA\' peers,\" Fitch said. For the latter half of this decade, the agency forecast that gross general government debt will reach 105 percent of gross domestic product (GDP), a ratio higher than any other triple-A rated country. \"In Fitch\'s opinion, this is at the limit of the level of government indebtedness that would be consistent with the US retaining its \'AAA\' status despite its underlying strengths.\" Despite some other recent reports warning economic growth could be stagnating, Fitch said it expects the country\'s economic recovery from the 2008-2009 recession will \"regain momentum\" and will achieve GDP growth of 2.25 percent over the long term. But it acknowledged that if growth deteriorates, that could change its outlook. And it also said it needed to see the results of the special committee of 12 members of Congress who are tasked with finding $1.2-1.5 trillion in deficit cuts for the next decade. Under a deal signed into law on August 2, the six Democrats and six Republicans have to complete the job by November 23 and their plan be accepted by Congress and White House. If not, automatically $1.2 trillion will be cut from government spending. The success of the committee is crucial: S&P also cited the political logjam in Washington as the reason it had doubts the United States would act on its fiscal problems. Fitch said if the committee is successful, it would \"demonstrate that a sufficiently broad-based political consensus can be forged\" on long-term deficit reduction measures. On the other hand, it warned that if it has to revise upward its projection of long-term public debt due to worsening economic conditions or the failure of the committee to achieve adequate cuts, it \"would likely\" downgrade its outlook for the country. \"The rating action would most likely be a revision of the rating outlook to negative, which would indicate a greater than 50 percent chance of a downgrade over a two-year horizon. \"Less likely would be a one-notch downgrade.\" The US Treasury Department, after strongly criticizing the S&P downgrade as faulty and unmerited, welcomed Fitch\'s conclusion. \"The Treasury Department continues to believe that Treasury securities are AAA investments,\" said spokesman Anthony Coley. However, he added, \"Today\'s report underscores the importance of Congress taking additional actions to address our long-term fiscal challenges.\"

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Arab Today, arab today fitch confirms us aaa rating with a stable outlook Arab Today, arab today fitch confirms us aaa rating with a stable outlook

 



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