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| US borrowing crisis 'days away from danger', says World Bank head | US borrowing crisis 'days away from danger', says World Bank head |
| (35 minutes later) | |
| The president of the World Bank, Jim Yong Kim, has warned that the United States is just "days away from a very dangerous moment" because of the government's borrowing crisis. | The president of the World Bank, Jim Yong Kim, has warned that the United States is just "days away from a very dangerous moment" because of the government's borrowing crisis. |
| He urged US policymakers to reach a deal to raise the government's debt ceiling before Thursday's deadline. | He urged US policymakers to reach a deal to raise the government's debt ceiling before Thursday's deadline. |
| The US Treasury will start to run short of funds if no agreement is reached for it to borrow on financial markets. | The US Treasury will start to run short of funds if no agreement is reached for it to borrow on financial markets. |
| Mr Kim warned this could be a "disastrous event" for the world. | Mr Kim warned this could be a "disastrous event" for the world. |
| "The closer we get to the deadline the greater the impact will be for the developing world. | "The closer we get to the deadline the greater the impact will be for the developing world. |
| "Inaction could result in interest rates rising, confidence falling and growth slowing," said Mr Kim, speaking at the World Bank's annual meeting in Washington. | "Inaction could result in interest rates rising, confidence falling and growth slowing," said Mr Kim, speaking at the World Bank's annual meeting in Washington. |
| "If this comes to pass it could be a disastrous event for the developing world and that will in turn greatly hurt the developed economies as well," he added. | "If this comes to pass it could be a disastrous event for the developing world and that will in turn greatly hurt the developed economies as well," he added. |
| 'Uneasy' | |
| If the US does run short of cash, this could cause it to default on its debts, a development which would be likely to have a severe effect on financial markets around the world. | |
| The BBC's Andrew Walker said that finance ministers from other countries think the US probably won't default, but they are uneasy and want the crisis resolved very soon. | |
| Republicans and Democrats failed to come to an agreement on Saturday, but Senator Dick Durbin, a Democrat, said the aim was to reach a deal on extending the debt limit before markets reopen on Monday. | |
| The White House rejected a deal for a short-term increase to the borrowing limit. | |
| "It wouldn't be wise, as some suggest, to just kick the debt ceiling can down the road for a couple of months, and flirt with a first-ever intentional default right in the middle of the holiday shopping season," said President Barack Obama. | |
| Shutdown | |
| The US government has been in partial shutdown since Congress missed a 1 October deadline to pass a budget. | |
| This has resulted in hundreds of thousands of federal employees being sent home and government offices closing. | |
| Republicans refused to approve the new budget unless President Obama agreed to delay or eliminate the funding of the healthcare reform law of 2010. |