US Treasury Chief: Failure to raise debt ceiling would threaten financial stability

Treasury Secretary Scott Bessent warned US congressional leaders on May 9 that the country is at risk of running out of borrowing authority by August.

In a letter, Bessent urged lawmakers to extend the debt ceiling by July, before Congress breaks for its annual August recess, to avoid a potential economic crisis, Caliber.Az reports, citing US media. 

Bessent acknowledged "significant uncertainty" regarding the exact date, but noted that after reviewing receipts from the April tax filing season, there is a "reasonable probability" that the federal government’s cash and extraordinary measures will be depleted by August, coinciding with Congress's scheduled break.

He called on Congress to increase or suspend the debt limit by mid-July to protect the nation’s financial standing. 

“A failure to suspend or increase the debt limit would wreak havoc on our financial system and diminish America’s security and global leadership position,” Bessent wrote in the letter.

The Republicans, who control both the House and Senate, are aiming to raise the debt ceiling by $4 to $5 trillion as part of their broader legislative package focused on advancing President Donald Trump’s agenda. However, internal divisions within the party over various components of the bill could delay passage, making it uncertain whether the debt ceiling will be raised before the August recess.

If the deadline is missed, Congress may need to seek Democratic support to address the issue and prevent a default, which could have severe economic repercussions.

By Sabina Mammadli