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US fiscal impasse affects global economy: World Bank

The federal government will reach its debt ceiling of $16.7 trillion by Oct 17

IANS  |  Washington 

The fiscal uncertainties in the have global implications and will undermine the efforts to end poverty in developing countries, the Bank said.

"The remains the biggest economic power in the and whatever happens here is going to affect all the developing countries," Xinhua quoted Sri Mulyani Indrawati, Bank Group's managing director and chief operating officer, as saying Thursday.

The debt ceiling issue is clearly getting attention around the world, and it is in everyone's interest for the fiscal dispute between and to be resolved in a timely manner, she told reporters during a press briefing.

As the government shutdown is in its 11th day, Washington faces another fiscal deadline. The federal government will reach its debt ceiling of $16.7 trillion by Oct 17, and failure to raise it would lead to a catastrophic default, Treasury Secretary Jacob Lew has said.

The lingering fiscal wrangle will push borrowing costs higher in developing countries, shifting their resources to service the debt from projects targeted at reducing poverty and enhancing shared prosperity.

Global economy has some good news as the European economy is picking up steam, but on the other hand, "we are still very concerned" about the fragile recovery of the global economy against the backdrop of the fiscal impasse, Indrawati said.

The Bank Group is committed to the main goals of ending extreme poverty by 2030 and promoting shared prosperity.

The Washington-based agency stands ready to help developing countries strengthen their policy frameworks to achieve robust and inclusive growth, she added.

First Published: Fri, October 11 2013. 11:36 IST