As early as mid-January

USA could soon reach new debt ceiling

US Secretary of the Treasury Janet Yellen

(Bild: AP)

According to US Treasury Secretary Janet Yellen, the US could reach its debt ceiling as early as mid-January. "The Treasury Department currently expects the new limit to be reached between January 14 and 23," said Yellen.

"At that point, the Treasury will need to take extraordinary measures," she also explained in the letter to the Republican Speaker of the US House of Representatives, Mike Johnson, and other members of parliament.

Debt ceiling last raised in mid-2023
Yellen called on the US Congress to act to protect "confidence" in the country and "its creditworthiness". The debt ceiling is the legal limit on the amount the US government can borrow to meet its obligations. It was last suspended in June 2023, but this period ends on January 1, 2025.

This means that a new ceiling will be set on January 2, which corresponds to the amount of debt issued by the Treasury Department. However, if the USA reaches this new ceiling, the next steps are likely to prove contentious - the issue of raising the ceiling has been a source of political tension for years.

USA still solvent thanks to "extraordinary measures"
The "extraordinary measures" mentioned by Yellen allow the Treasury Department to continue financing government activities. However, if the debt ceiling is not raised or suspended again before the Treasury's options are exhausted, the US is at risk of default with far-reaching consequences for the world's largest economy.

According to Yellen, the USA will not reach the ceiling immediately after the end of the suspension. According to the Treasury Secretary, this is due to the fact that the country's outstanding debt is expected to fall by around 54 billion US dollars (51.75 billion euros) on January 2 as a result of the repayment of securities.