BAFL 46.57 Increased By ▲ 0.20 (0.43%)
BIPL 20.15 No Change ▼ 0.00 (0%)
BOP 5.32 No Change ▼ 0.00 (0%)
CNERGY 4.80 Increased By ▲ 0.20 (4.35%)
DFML 17.16 Increased By ▲ 0.56 (3.37%)
DGKC 78.51 Increased By ▲ 0.66 (0.85%)
FABL 28.90 Increased By ▲ 0.69 (2.45%)
FCCL 20.42 Increased By ▲ 0.27 (1.34%)
FFL 9.47 Increased By ▲ 0.25 (2.71%)
GGL 12.75 Decreased By ▼ -0.06 (-0.47%)
HBL 111.80 Increased By ▲ 0.30 (0.27%)
HUBC 123.25 Decreased By ▼ -0.55 (-0.44%)
HUMNL 7.55 Decreased By ▼ -0.20 (-2.58%)
KEL 3.30 Increased By ▲ 0.03 (0.92%)
LOTCHEM 28.10 Decreased By ▼ -0.35 (-1.23%)
MLCF 41.90 Increased By ▲ 0.15 (0.36%)
OGDC 113.80 Decreased By ▼ -1.70 (-1.47%)
PAEL 18.80 Decreased By ▼ -0.24 (-1.26%)
PIBTL 5.52 Decreased By ▼ -0.06 (-1.08%)
PIOC 113.70 Increased By ▲ 1.10 (0.98%)
PPL 98.68 Decreased By ▼ -1.52 (-1.52%)
PRL 26.57 Increased By ▲ 0.87 (3.39%)
SILK 1.08 Decreased By ▼ -0.03 (-2.7%)
SNGP 67.47 Decreased By ▼ -0.33 (-0.49%)
SSGC 12.60 Increased By ▲ 0.05 (0.4%)
TELE 8.61 Increased By ▲ 0.11 (1.29%)
TPLP 13.36 Decreased By ▼ -0.04 (-0.3%)
TRG 85.86 Increased By ▲ 0.21 (0.25%)
UNITY 26.59 Decreased By ▼ -0.06 (-0.23%)
WTL 1.57 Decreased By ▼ -0.01 (-0.63%)
BR100 6,380 Increased By 2.5 (0.04%)
BR30 22,347 Decreased By -29.2 (-0.13%)
KSE100 62,355 Decreased By -137.7 (-0.22%)
KSE30 20,769 Decreased By -59.5 (-0.29%)

NEW YORK: A US government shutdown would have negative implications for its credit assessment as it would highlight the weakness of US institutional and governance strength compared to other top-rated governments, Moody's said on Monday.

However, the economic impact would likely be short-lived, the credit ratings agency said.

US government services would be disrupted and hundreds of thousands of federal workers furloughed without pay if Congress fails to provide funding for the fiscal year starting Oct. 1.

The publication of major US economic data of critical importance to policymakers and investors will also be suspended indefinitely should the federal government shut down.

"A shutdown would be credit negative for the US sovereign," Moody's, which has a triple-A rating for the US government, said in a statement.

Moody’s downgrades 10 US banks, warns of possible cuts to others

"In particular, it would demonstrate the significant constraints that intensifying political polarization put on fiscal policymaking at a time of declining fiscal strength, driven by widening fiscal deficits and deteriorating debt affordability," it said.

Congress so far has failed to pass any spending bills to fund federal agency programs in the fiscal year starting on Oct. 1 amid a feud within the Republican Party.

The most direct impact of a shutdown would be through lower government spending, said the agency, warning however that the longer the shutdown lasts, the more negative its impact would be on the broader economy.

"A prolonged shutdown would likely be disruptive both to the US economy and financial markets," it said.

The shutdown would not impact government debt payments but it would highlight how political polarization is impacting fiscal decisions, particularly as it would follow political brinkmanship on the government's debt ceiling earlier this year, said Moody's.

The debt ceiling crisis, even though it was resolved before a potential debt default, was a major factor leading another credit rating agency, Fitch, to downgrade its US rating by one notch in August.

"Fiscal policymaking is less robust in the US than in many Aaa-rated peers, and another shutdown would be further evidence of this weakness," Moody's said.

"Looking ahead, weaker fiscal policymaking that leads to persistently high fiscal deficits and higher-than-expected interest costs would put pressure on the US rating or outlook," it said.


Comments are closed.

Moody's warns US government shutdown would be 'credit negative'

Intra-day update: rupee sees minor gain against US dollar

Open market: rupee stable against US dollar

US, UN urge civilian protections, but Israel intensifies southern Gaza offensive

At least 3 children among 4 injured in blast on Peshawar’s Warsak Road

Moody’s cuts China’s credit outlook to negative

Oil prices little changed amid OPEC+ cut doubts, Mideast tension

Pakistan not on agenda of IMF Executive Board meeting

Four countries: FBR decides to ink deal on Electronic Data Interchange

PM urges youth to avail CPEC opportunity

Overbilling in violation of Nepra Act: All Discos including KE to face legal proceedings