WASHINGTON (AP) — World finance officials prepared to wrap up three days of meetings in Washington, where fretting about the risk of an unprecedented U.S. debt default overshadowed myriad worries about a shaky global economic recovery.
Finance ministers and central bank chiefs from the Group of 20 major economies urged the U.S. on Friday to take urgent action to resolve the political impasse that has partially shut down the government and delayed passage of a bill to raise the debt ceiling.
If Congress does not increase the borrowing limit by Thursday, the U.S. could default on its debt payments and cause serious turmoil in world markets and economies.
With the U.S., Europe and Japan all just emerging from long slumps, finance officials have been predicting a modest recovery in the global economy in the coming year, driven in large part by a strengthening U.S. economy.
But the current budget stalemate, coupled with anticipation that the Federal Reserve will soon start scaling back its massive stimulus program for the economy, have officials worried that the fragile global recovery could be derailed.
In prepared remarks to finance officials released late Friday, U.S. Treasury Secretary Jacob Lew said the United States understood the role it played as "the anchor of the international financial system." He said the administration was continuing to push Congress to reopen the government and increase the borrowing limit.
"Prior to the government shutdown, all signs pointed to the strengthening recovery of the U.S. economy," Lew said. "If Congress acts quickly, this will continue to be the case."
The G-20 officials issued their plea for a U.S. resolution on the debt ceiling at the end of two days of discussions held in advance of Saturday meetings of the 188-nation International Monetary Fund and its sister lending organization, the World Bank. The Saturday meetings will be the last in three days of high level discussions.
Russian Finance Minister Anton Siluanov, whose country currently holds the rotating chair of the G-20, told a news conference Friday that the budget stalemate between Congress and the Obama administration was discussed at the meeting.
But "no emergency or extraordinary plans" were made during the meeting in case of a U.S. default, he said.
"In the course of today's meeting, no plans were drawn up," he said. "No worst-case scenario was discussed. We trust the U.S. authorities will find a way out of this complex situation."
A number of the leaders attending the meeting said they saw the risk of default as remote.
In one telling comment, Siluanov offered a glimpse of what a tremendous impact a U.S. debt default would have on Russia's economy and many others like it around the world. Most central banks hold a significant portion of their foreign currency reserves in U.S. Treasury securities — considered the safest investment in the world.
Siluanov said about 45 percent of Russian's foreign exchange reserves are invested in U.S. Treasuries. Nevertheless, he said Russia was not considering reducing the size of its Treasury holdings because they are long-term investments while the debt crisis was a short-term issue.
America will run out of borrowing authority for new debt on Thursday. Treasury Secretary Lew has warned there is expected to be only $30 billion in cash on hand at that time and the U.S. will soon fall short of money to meet all of its obligations, including interest payments on the $16.7 trillion federal debt. That would trigger the first U.S. debt default ever.
Associated Press reporters Harry Dunphy and Matthew Pennington contributed to this report.
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