Biden stimulating the economy would give flexibility to debt management: Fitch

The support the economy will receive United State With the fiscal stimulus proposed by President-elect Joe Biden, it would give sovereign flexibility to remain in the limited group of exporters with the highest “AAA” rating, as analysts cautioned against Fitch.

In the agency’s institutional podcast, sovereign group director Charles Seville estimated that the economy’s first debt was 120% of GDP, which became a factor of vulnerability when there was no reliable strategy. And sustainable financing.

He acknowledged that the negative expectations that have affected the US rating since August indicate one of the three possibilities for downgrade, a measure that may occur if they fail to develop a reliable plan to stabilize the fiscal deficit.

However, the analyst clarified that this cut will not happen in the short term, which will lead the new administration to steer the economy’s recovery. On the other hand, he said that the additional incentives that the new government plans to grant will help enhance its ability to implement interventions that help domestic demand and cope with the impact of the epidemic.

The opposite case, which would allow the memorandum to return to a stable outlook, is to enhance the financial flexibility that characterizes the country and the speed of economic recovery.

The latter, the speed of the recovery, is a factor that, according to the analyst, differentiates the United States from the other nine exporters with the highest credit rating.

Congress will qualify the check

In the podcast dedicated to the new management policy for Biden His report, “Sovereign Panorama”, Seville, stated that the fiscal stimulus proposal, amounting to 1.9 billion dollars, still has to pass through the legislation candidate.

This means that it may face resistance from the Republican wing in Congress. However, he expected the proposal to be passed in a softer version that would in no way stimulate the economic recovery.

10 “AAA” set

Out of 10 sovereign issuers, Fitch received the highest rating of “AAA”, which indicates the minimum risk of default:

United States, Sweden, SingaporeNorway, the Netherlands, Luxembourg, Denmark, Switzerland, Australia and Germany.

Of all of them, the two countries with the highest government debt are Singapore and the United States, with data from International Monetary Fund (IMF) Both manage liabilities at the equivalent of 131.2 points of GDP

According to Seville, the big difference between the United States and other countries in the “AAA” group is the flexibility it has in managing debt.

Among the ten countries, the lowest debt is Luxembourg, which accounts for 26.9% of GDP, and Denmark, which manages liabilities equivalent to 34.9% of GDP.

[email protected]