Fitch Ratings affirmed the US's 'AA+' credit rating. Reuters
Fitch Ratings affirmed the US's 'AA+' credit rating. Reuters
Fitch Ratings affirmed the US's 'AA+' credit rating. Reuters
Fitch Ratings affirmed the US's 'AA+' credit rating. Reuters

Fitch says US outlook stable with election unlikely to change fiscal policy


Kyle Fitzgerald
  • English
  • Arabic

Fitch Ratings on Thursday said the US outlook remains stable and the outcome of the 2024 presidential election will have little effect on Washington's fiscal policies.

The ratings company affirmed the US credit rating as “AA+” due to its structural strength as the world's largest economy, its high per capita income and “tremendous” financial flexibility.

Fitch downgraded the US' once-perfect credit rating last year after a long debt-ceiling battle between the White House and Congress, which drew a furious response from President Joe Biden's administration. The agency also gave the country's rising fiscal deficits as a reason for its decisions.

“The government has failed to meaningfully tackle large fiscal deficits, the growing debt burden and looming increases in spending associated with an ageing population,” Fitch said in a statement on Thursday, noting the US government debt is more than double the "AA" rating medians.

The non-partisan Congressional Budget Office earlier forecast US deficits to total nearly $2 trillion this year. The CBO said if its projection is accurate, then federal debt held by the public could grow up to 122 per cent by the end of 2034.

The US national debt is more than $35 trillion.

Treasury Secretary Janet Yellen told CNBC this year that the US debt load is in a “reasonable place” as long as it remains stabilised relative to the size of the US economy.

Federal Reserve chairman Jerome Powell offered a more sobering take this year, saying US government spending is moving at an unsustainable pace and it would be better for leaders to address it sooner rather than later.

Fitch said the federal government still enjoys financial flexibility because of the role of the US dollar in the world's currency reserves.

It also expects the outcome of the 2024 US election to have little effect on the country's fiscal profile.

“The outcome of the upcoming November 5, 2024 presidential and congressional elections will be important for US economic and fiscal policies,” the ratings agency said.

“However, Fitch believes the underlying fiscal position will remain largely unchanged despite the differing economic objectives, tax policies and spending priorities of Vice President Kamala Harris and former president Donald Trump.”

Fitch said revenue from Mr Trump's across-the-board tariffs proposals would be offset by a full extension of his 2017 tax plan and exemptions to social security.

It said Ms Harris's plans to increase corporate taxes from 21 per cent to 28 per cent would be offset by expanding the child tax credit.

The agency also said the “US standards of governance are also below its 'AA' rated peers”, pointing to political brinkmanship over the 2023 debt-ceiling battle and the threat of government shutdowns in Congress.

The current debt ceiling suspension runs until the end of the year.

Fitch said it believes the new administration will use extraordinary measures and that cash balance will last for a handful of months until the hypothetical date the US runs out of it.

EXPATS
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ESSENTIALS

The flights

Emirates flies from Dubai to Phnom Penh via Yangon from Dh2,700 return including taxes. Cambodia Bayon Airlines and Cambodia Angkor Air offer return flights from Phnom Penh to Siem Reap from Dh250 return including taxes. The flight takes about 45 minutes.

The hotels

Rooms at the Raffles Le Royal in Phnom Penh cost from $225 (Dh826) per night including taxes. Rooms at the Grand Hotel d'Angkor cost from $261 (Dh960) per night including taxes.

The tours

A cyclo architecture tour of Phnom Penh costs from $20 (Dh75) per person for about three hours, with Khmer Architecture Tours. Tailor-made tours of all of Cambodia, or sites like Angkor alone, can be arranged by About Asia Travel. Emirates Holidays also offers packages. 

Know your Camel lingo

The bairaq is a competition for the best herd of 50 camels, named for the banner its winner takes home

Namoos - a word of congratulations reserved for falconry competitions, camel races and camel pageants. It best translates as 'the pride of victory' - and for competitors, it is priceless

Asayel camels - sleek, short-haired hound-like racers

Majahim - chocolate-brown camels that can grow to weigh two tonnes. They were only valued for milk until camel pageantry took off in the 1990s

Millions Street - the thoroughfare where camels are led and where white 4x4s throng throughout the festival

UAE currency: the story behind the money in your pockets
Updated: August 29, 2024, 8:16 PM`