An agreement in principle reached to avoid a default by the United States

According to the first elements, the agreement would provide for the increase of the debt ceiling for a period of two years, limiting spending during this period.

House Leader Kevin McCarthy and U.S. President Joe Biden after a meeting on U.S. debt, May 22, 2023. AFP - SAUL LOEB

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Will the U.S. avoid default? A few days before the deadline, US President Joe Biden and Republican leader Kevin McCarthy reached an "agreement in principle" on Saturday after long negotiations on the phone on Saturday night.

A first major step that should allow the country to avoid bankruptcy. The plan still has to be approved by the House of Representatives, with a Republican majority, and the Senate, with a Democratic majority. Each in turn, they must vote on this agreement on Wednesday.

In a brief speech, Republican Leader Kevin McCarthy said the budget compromise was "entirely worthy of the American people." He particularly welcomed the "historic cuts" in public spending that he said the agreement provides, which was the main demand of the Republicans.

This agreement avoids a "catastrophic default," responded Democratic President Joe Biden Saturday in a statement. "This agreement is a compromise, which means that everyone does not get everything they want," he said, assuring that the text, the details of which are not known, "reduces spending while protecting essential public programs".

Debt ceiling

According to several American media, the agreement reached between the executive and the opposition raises for two years, after the 2024 presidential election, the public debt ceiling of the United States. The text of the agreement is due to be released Sunday after a new meeting between Biden and McCarthy.

Without raising this ceiling, the world's leading power risked defaulting on 5 June, unable to honour its financial commitments, whether in terms of salaries, pensions or repayments to their creditors.

>> READ ALSO: Will the United States default on its sovereign debt?

(With AFP)

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