'US credit rating safe despite debt'

 

WASHINGTON: Treasury Secretary Timothy Geithner says the US government "will never" lose its sterling credit rating despite big budget deficits and a newly increased debt limit that now tops US$14 trillion (US$1 = RM3.44).

Geithner says in an interview broadcast yesterday that in times of economic crisis, international investors will continue to buy US Treasury bonds because the bonds are a safe investment.

The US Treasury is heavily reliant on borrowed money to fund the government's day-to-day operations, which it raises by selling US notes and bonds throughout the world in rising volumes to fund budget deficits that are forecast to hit US$1.6 trillion in fiscal 2011.

Geithner said the US economy expanded at nearly a 6 per ent annual rate in the fourth quarter of 2009 and said the economy was definitely "healing" after the financial crisis that drove it into recession in late 2007.

"This is going to take a while, and it's going to be uneven," he added.

Geithner claimed there were even some encouraging signs in Friday's report on US unemployment for January, which showed another 20,000 jobs lost but a dip in the unemployment rate to 9.7 per cent from 10 per cent in December.

He said the Obama administration is doing everything it can to enhance recovery prospects and played down chances that growth might stall and push the United States back into recession.

"I think we have much, much lower risk of that today than at any time over the last 12 months or so," Geithner said.

Moody's Investors Service recently issued a warning that the government's credit rating could eventually be in jeopardy if the nation's finances don't improve. The cost of borrowing would increase significantly if the ratings service lowered the credit rating, also known as a bond rating, for US Treasuries.

Geithner tells ABC television's "This Week" that will never happen. - Reuters