Ratings agency Fitch put the United States' credit on watch for a possible downgrade on Wednesday.
Fitch put the country's "AAA" rating, its highest rank, on a negative watch in a precursor to a possible downgrade should lawmakers fail to raise the amount that the Treasury can borrow before it runs out of money, which could happen as soon as next week, according to Reuters.
President Joe Biden's administration and congressional Republicans are at an impasse over raising the $31.4 trillion debt ceiling, and Fitch said its rating could be lowered if the US does not raise or suspend its debt limit in time.
"Fitch still expects a resolution to the debt limit before the X-date," the credit agency said in a report.
"However, we believe risks have risen that the debt limit will not be raised or suspended before the X-date and consequently that the government could begin to miss payments on some of its obligations."
Fitch said that the failure to reach a deal "would be a negative signal of the broader governance and willingness of the US to honor its obligations in a timely fashion," and would be unlikely to be consistent with a "AAA" rating.
The "rating watch" indicates that there is a heightened probability of a rating change and the likely direction of such a change, and is different from a "ratings outlook" which indicates the direction a rating is likely to move over a one- to two-year period.
Fitch now predicts that the US government will spend more than it earns, creating a deficit of 6.5% of the country's total economy in 2023 and 6.9% in 2024.
