IMF chief confident US will not default on debt

The International Monetary Fund (IMF)’s managing director Kristalina Georgieva expressed confidence that the United States will reach a deal on the debt ceiling and avoid a default.
At a panel session at the Qatar Economic Forum Wednesday Georgieva urged central banks around the world to keep monetary policy tight in the face of inflation risks.
“History tells us that US will wrestle with this notion of default but come the 11th hour it gets resolved. And I have confidence we will see that play it again. But such high uncertainties are unnecessary for the global economy. We should be mindful that the risk is there.”
The US government could fall behind on its bills next month - and even default on its debt - if Congress doesn't raise a $31.4tn cap on government borrowing, a failure that could trigger economic calamity and panic on global financial markets, a Reuters’ dispatch said.
The latest round of talks on the debt ceiling between representatives of President Joe Biden and congressional Republicans ended without progress on Tuesday, as the June 1 deadline inched closer.
"History tells us that the US would wrestle with this notion of default... but come the 11th hour it gets resolved and I have confidence we will see that play again," Georgieva said.
Finance ministers from Saudi Arabia and Qatar, who joined Georgieva for the panel discussion, agreed that a resolution was needed sooner rather than later.
Georgieva said that the US dollar is likely to remain a global reserve currency despite increasing discussion on moves by countries to reduce their reliance on the greenback, known as "de-dollarisation".
"This story of de-dollarisation has been with us for some time. The dollar has been going slightly down. It was 70% of reserves, but now it is slightly below 60% of reserves. Understandably, there are other currencies gaining.
“We don't expect a rapid shift in (dollar) reserves because the reason the dollar is a reserve currency is because of the strength of the US economy and the depth of its capital markets...Don't kiss your dollars goodbye just yet," Georgieva said.
The IMF chief said while headline inflation generally was going down, the core inflation primarily because of stubbornly high food prices is still not trimming down the way it should.
“What that means is that the central banks should stay the course. Because if they move back on interest rates prematurely, then inflation may become a problem for growth for a longer period of time. So, stay put...the interest rates are high...they will stay high for longer...but we are expecting in 2024 or early 2025 the picture to change.
Georgieva Wednesday met His Highness the Amir Sheikh Tamim bin Hamad al-Thani.
Qatar has pledged 20% of its Special Drawing Rights (SDR) holdings towards the IMF's Poverty Reduction and Growth Trust (PRGT) and Resilience Support Trust (RST) mechanisms for financial support, Georgieva said on Twitter.
SDR is an international reserve asset created by the IMF to supplement other reserve assets of member countries. According to the IMF website, Qatar has SDR holdings of 985mn.
"The pledge made today would allow the IMF to expand concessional lending to low income countries and expand lending to vulnerable-to-climate-shocks countries," Georgieva said in a video shared by the Qatar News Agency.