U.S. Treasury Secretary Janet Yellen has warned policymakers that the government will run out of money on Oct. 18 unless Congress raises the debt ceiling.
According to Yellen, the U.S. could be stuck in a debt crisis if Washington fails to act within a week. The issue could lead to major damage to the economy and markets in addition to delaying payments to millions of Americans.
The warning was issued after the Republican Senate blocked a bill to adjust debt limits and prevent government shutdowns from continuing in the Senate.
Yellen noted that the government’s gross daily cash flow, excluding funding, is estimated to average around $ 50 billion a day since last year and has surpassed $ 300 billion.
September 30 marks the end of the government’s annual fiscal, and becomes the deadline for Congress to approve funding measures.
According to a research note released last week, Barclays analysts noted there were additional factors driving uncertainty over the debt ceiling level following a collision with a Congressional funding package that needed to be approved.
Additionally, the changes caused by the pandemic have also caused difficulties for the assessment of the Treasury Department’s expected flows and payments.
