The federal government is on track to max out on its $31.4 trillion borrowing authority as soon as this month, starting the clock on an expected standoff between President Joe Biden and the new House Republican majority that will test both parties' ability to navigate a divided Washington, with the fragile global economy at stake. Once the government bumps up against the cap — it could happen any time in the next few weeks or longer — the Treasury Department will be unable to issue new debt without congressional action. The department plans to deploy what are known as “extraordinary measures” to keep the government operating. But once those measures run out, probably mid-summer, the government could be at risk of defaulting unless lawmakers and the president agree to lift the limit on the U.S. government's ability to borrow. The expected showdown over the debt limit would be a stark display of the new reality for Biden and Democrats, who enjoyed one-party control of Washington for the past two years. It would presage the challenges to come in achieving even the modest ambitions that Democrats are bringing to the task of legislating in a divided Capitol. Read more: US economy likely returned to growth after shrinking in first 2 quarters of 2022 The White House has insisted that it won't allow the nation's credit to be held captive to the demands of newly empowered GOP lawmakers. But the concessions made by new House Speaker Kevin McCarthy in his arduous path to securing the job raise questions about whether he has the ability to cut any kind of deal to resolve a standoff. McCarthy, who only secured his post after 15 rounds of voting and major compromises with hard-line members of his caucus, has said that his fellow Republicans will only agree to increase the debt ceiling in return for spending cuts of unspecified magnitude. And a new rule that allows any one lawmaker to trigger a vote for McCarthy's removal could make even the most urgent of votes a dicey matter. McCarthy said he’s spoken with Biden about the coming debt ceiling and told the president “it doesn’t have to come to that” — meaning a federal government shutdown over spending levels. “This is our moment to change the behavior,” McCarthy said Tuesday on Fox’s “Hannity.” But the new speaker stopped short of saying Republicans now in charge of the House would go so far as to refuse to pass the annual spending bills needed to fund the government, as happened more than a decade ago during an earlier debt ceiling showdown in Congress. “We’re going to look at every single dollar spent,” McCarthy said. The stakes are treacherous. Past forecasts suggest a default could instantly bury the country in a deep recession, right at a moment of slowing global growth as the U.S. and much of the world face high inflation because of the pandemic and Russia’s invasion of Ukraine. Read more: US economy shrinks for a 2nd quarter, raising recession fear The White House has ruled out executive action to stave off a default. “Congress is going to need to raise the debt limit without — without — conditions and it’s just that simple,” White House press secretary Karine Jean-Pierre said recently. “Attempts to exploit the debt ceiling as leverage will not work. There will be no hostage taking.” On Capitol Hill, Republican Rep. Chip Roy of Texas, one of the McCarthy holdouts and an outspoken critic of government spending, wouldn't rule out trying to oust McCarthy if he fails to live up to his pledge to seek spending cuts along with any debt limit increase. “We will use the tools of the House to enforce the terms of the agreement,” Roy told CNN on Sunday. Rep. Bob Good, R-Va., said in a Fox News interview on Monday that the debt limit will be “the real test” for conservatives. Republicans have to begin “leveraging power to accomplish what you need to accomplish," he said. Good fought McCarthy’s bid to become speaker until the final vote, when he responded “present.” The debt ceiling debate is a form of political theater — it encourages lawmakers to engage in brinkmanship in the name of fiscal responsibility — though past showdowns have done little to meaningfully alter the long-term rise in federal debt. House Republican leaders liken the debt ceiling to a credit card limit, promising to put “mechanisms in place so that you don’t keep maxing it out,” in the words of House Majority Leader Steve Scalise of Louisiana. “We’re going to confront this and I think the American people have called on us to confront this,” said Scalise. Any effort to compromise with House Republicans could force Biden to bend on his own priorities, whether that's the funding of the IRS to ensure that wealthier Americans pay what they owe, or domestic programs for children and the poor. It's hard to peg the exact date when the government will hit its debt ceiling, because payments and receipts vary from day to day, especially with the April filing deadline for income taxes. The current balance suggests the debt ceiling could be reached as early as this week or as late as March. When Treasury takes extraordinary measures to keep the government running, it can halt contributions to pension funds and borrow from accounts to manage changes in the foreign exchange rate, freeing up cash to meet its other obligations. Treasury first used these measures in 1985 and has used them at least 16 times since, according to the Committee for a Responsible Federal Budget, a fiscal watchdog. But the extraordinary measures only work for so long, and would likely run out — and put the U.S. at risk of default — sometime around the summer. If the government were to default, financial markets could be expected to crash. Several million workers could be laid off. The world could feel the aftershocks of the crisis for years to come. Moody's Analytics called this risk “cataclysmic” in a 2021 forecast ahead of the previous debt ceiling increase, suggesting that the resulting chaos would be due to government dysfunction, rather than the underlying health of the U.S. economy. “Debt limit negotiations are always protracted and almost always contentious, and the political trends seem to make it likely that they will exacerbate those tendencies and will create a volatile situation," said Shai Akabas, director of economic policy at the Bipartisan Policy Center, which forecasts the so-called X-date when the government exhausts its extraordinary measures. Akabas told the Associated Press the X-date has "likely moved forward" from this year's third quarter due to rising interest rates and a pause on student loan repayments recently extended by the Biden administration. A more precise date will become available when the Congressional Budget Office updates its outlook later this month. Either way, lawmakers know the risks that they're taking with the livelihoods of people across the country by having this dispute. Economists have warned them plenty of times. A 2013 Treasury report drew on the debt ceiling impasse in 2011, when Republicans had also just won a House majority. It outlined how impasses contribute to long-lasting scars on financial markets, noting that business and household confidence fell to levels that are typically only seen during recessions. "It took months before confidence recovered, even though, ultimately, there was no default," the report said.
Spiralling debt in low and middle-income countries has compromised their chances of sustainable development, the UN trade facilitation agency has said. Rebeca Grynspan, the head of UNCTAD, said between 70 and 85 percent of the debt that emerging and low-income countries are responsible for is in a foreign currency. This has left them highly vulnerable to the kind of large currency shocks that hit public spending – precisely at a time when populations need financial support from their governments. Speaking at the 13th UNCTAD Debt Management Conference in Geneva recently, Rebeca said so far this year, at least 88 countries have seen their currencies depreciate against the powerful US dollar, which is still the reserve currency of choice for many in times of global economic stress. And in 31 of these countries, their currencies have dropped by more than 10 percent. This has had a hugely negative impact on many African nations, where the UNCTAD chief noted that currency depreciations have increased the cost of debt repayments by the equivalent of public health spending in the continent. Read more: UN reminds Bangladesh of commitments to free expression, peaceful assembly A wave of global crises has led many developing countries to take on more debt to help citizens cope with the fallout. Government debt levels as a share of GDP increased in over 100 developing countries between 2019 and 2021, said UNCTAD. Excluding China, this increase is estimated at $2 trillion. "This has not happened because of the bad behaviour of one country. This has happened because of systemic shocks that have hit many countries at the same time," Rebeca said. With interest rates rising sharply, the debt crisis is putting enormous strain on public finances, especially in developing countries that need to invest in education, health care, their economies and adapting to climate change. As debt burdens rise, developing country governments end up in a vicious circle, unable to invest in achieving Sustainable Development Goals (SDGs) and grow their economies, making it even harder to pay their debts. If a country defaults, the terms of debt restructuring are usually set by groups of creditors competing to get the best terms, rather than giving priority to economic and developmental concerns, or how sustainable it is to keep up with payments. "To resolve these issues equitably, this needs to be done in a manner that maintains the debtor countries' ability to grow and meet its current and future debt obligations, while also fulfilling its commitments to the SDGs," Sri Lankan President Ranil Wickremesinghe said in a statement delivered by the country's permanent representative in Geneva Ambassador Gothami Silva. Read more: ‘Friendship to all, malice towards none’: Bangabandhu's historic quote incorporated in UN resolution UNCTAD said if the median increase in rated sovereign debts since 2019 were fully reflected in interest payments, then governments would pay an additional $1.1 trillion on the global debt stock in 2023, estimates show. This amount is almost four times the estimated annual investment of $250 billion required for climate adaptation and mitigation in developing countries, according to a report from the UN agency.
Finance Minister AHM Mustafa Kamal has said that Bangladesh has one of the lowest debt-to-GDP ratios in the world. He said Bangladesh has never failed to pay domestic and foreign debt. Kamal said this while attending the annual meeting at the Asian Development Bank (ADB) headquarters in Manila on Tuesday, according to a press release of the finance ministry. Read: Market-based foreign exchange rate may be introduced soon: Finance Minister The finance minister also attended a bilateral meeting with president of ADB, Masatsugu Asakawa. The finance minister said that currently, the cumulative financing of ADB in Bangladesh stands at $27.6 billion. Out of this, total outstanding amount is $11.69 billion. Kamal thanked ADB's assistance in developing member countries, including Bangladesh, in recovering from economic and health crises in Asia and the Pacific region by providing quick support for procuring Covid-19 vaccine. Read: No IMF proposal received to raise power, petroleum prices: Finance Minister It is very important that the Bangladesh-ADB Country Partnership Strategy (2021-2025) is aligned with Bangladesh's national development goals. The finance minister expected $12-15 billion in loan support from ADB over the next five years, which is crucial for Bangladesh’s achieving development milestones.
Travelling without a ticket may be a common offence. But after travelling without tickets for many years, a 61-year-old retired Anti-Corruption Commission (ACC) official chose to listen to his conscience. Emdadul Haque, a resident of Kanikara village in Nabinagar upazila, came back to Brahmanbaria railway station on Monday and paid Tk 2,350 to the station master. "The amount was due to the railways as all these years I travelled without a ticket to Dhaka from the district. Now I will get peace of mind," said Emdadul. Also read: Probe body formed over Natore train derailment Chief booking assistant of Brahmanbaria railway station, Kabir Hossain Talukder, said he was really moved by Emdadul's gesture. “We issued tickets worth Tk 2,530 for an intercity train, Mahanagar Provati, from Brahmanbaria to Chattogram so that Emdadul can 'repay his debt'. His honesty is an inspiration for all of us,” he said. Emdadul’s son Imran said his father is basically a man of integrity. “During the last year of service, he travelled to Dhaka from Brahmanbaria several times without a ticket but kept an account of it," he said. Also read: Unmanned rail crossings are mostly to blame for rail accidents
A 32-year-old farmer allegedly committed suicide by taking poison at Sogunia village in Sherpur upazila in Bogura, his family said on Thursday. The deceased was identified as Abdul Karim, son of Juran Ali in Bishalpur union of the upazila. Also read:Child killed as branch falls off tree in Bogura Family members said Karim had borrowed loans from several NGOs and individuals. But due to the loss of paddy and other crops in the current season, he defaulted in repaying the loan. Meanwhile, creditors were pushing for money. Karim took poison around 11 pm on Wednesday night, said the family. He was rushed to Upazila Health Complex. Later, he was shifted to Shaheed Ziaur Rahman Medical College in Bogura where he died while undergoing treatment there. Also read: Case filed over killing Bogura Polytechnic student The body was handed over to the family after completing the legal procedures, said Rabiul Islam, sub-inspector (SI) of Sherpur Police Station. An unnatural death case has been lodged at Bogra Sadar Police Station in this regard, added the SI.
Drowning in debt, a 56-year-old government school principal allegedly end his life in his parents-in-law's house in Kumarkhali upazila of Kushtia on Tuesday morning. Police suspect that Rezaul Islam, the principal of Keshabpur Government Primary School in Joduboyra union, took the extreme step as he was unable to repay a loan of Tk 20 lakh that he took recently to build a house of their own. Read: Teenage student allegedly commits suicide in Kaptai His wife, Shefali Aktar, the principal of Char Agrakunda Government Primary School, spotted the body hanging from an iron grille of their house and alerted their family members and police. Kamruzzaman Talukdar, officer-in-charge of Kumarkhali police station, said that no autopsy was conducted as the family members did not lodge any complaint. "It seems he was unable to repay the huge loan," he said. On Monday afternoon, his brothers lent Rezaul nearly TK 1.7 lakh. “He went to sleep at night like regular days, but early this morning, I saw his body hanging from the grille," said his wife. Read: Couple ‘commits suicide’ in Bagerhat Meanwhile, Monsur Ali, an assistant teacher of Keshabpur Government Primary School, said, “During a chat with other teachers last Thursday, Rezaul Bhai cracked jokes about leaving us for forever.”