'US economic growth, not credit rating, at risk from shutdown,' says S&P
S&P Global Ratings. In contrast with the US government debt-ceiling impasse earlier this year, “a shutdown does not raise the risk of an event of default," said Mukherji in an email.
“Such an outcome would affect economic activity but is not likely to have an impact on the sovereign rating." S&P released a report on the impact of the shutdown for the US public finance sector on Friday. If a shutdown begins on Oct.
1, S&P expects “the federal government will continue to provide essential services and meet its spending commitments (including paying for debt service) that do not rely on annual budgetary appropriations from Congress," Mukherji said. Also Read: S&P retains India's FY24 growth forecast at 6%, citing global economic slowdown, rising monsoon risks In Friday’s report, S&P said the company doesn’t expect a short shutdown of a few weeks to result in credit pressures for US public finance issuers.
The agency did warn that a lengthy furlough for the government “could introduce credit pressures as funding and reimbursement delays flow down to public finance entities that lack liquidity and other revenue sources." In March as the latest debt ceiling tussle loomed, S&P Global Ratings said in a statement it “could lower the rating over the next two to three years if unexpected negative political developments weigh on the strength of American institutions and the effectiveness of long-term policymaking or jeopardize the dollar’s status as the world’s leading reserve currency." Also Read: S&P Global downgrades Vedanta Resources to CCC, second rating cut this week after Moody's At the time S&P affirmed its ‘AA ’ long-term and ‘A-1 ’ short-term unsolicited sovereign credit ratings on the US. The outlook on the long-term
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