The US government could run out of money in early September unless Congress allows the administration to borrow more, Treasury Secretary Steven Mnuchin warned Friday.
The Treasury has been taking extraordinary steps since March to shuffle its cash around to continue paying its bills after hitting the $22 trillion debt limit set by Congress.
Officials have issued dire warnings that without an increase in the borrowing limit, the US could default on its debt for the first time and they have been urging the legislature to act before the summer break later this month.
“Based on updated projections, there is a scenario in which we run out of cash in early September, before Congress reconvenes,” Mnuchin warned in a letter to House Speaker Nancy Pelosi.
Pelosi said late on Thursday that she is working to finalise a deal that would temporarily raise the debt ceiling before the House of Representatives shuts down July 26, according to news reports.
The House is not scheduled to reopen until September 9.
The United States lost its coveted AAA debt rating in 2011, following battles among lawmakers in Washington over whether to lift caps on US sovereign borrowing, raising the likelihood of a US default.
Because the federal government traditionally runs a budget deficit, it has no choice but to borrow to finance government operations, including salaries, retirement benefits, social spending and other expenses already approved by Congress.
The Treasury previously said it could hold out until late summer, but the latest letter adds more urgency to the debate. It has suspended issuing new debt, and halted investments by government pension funds.
Coordinating Minister for the economy and finance Minister, Dr Ngozi Okonjo-Iweala has finally thrown her hat in the ring for the race for the World Bank’s president.
Flanked by her counterparts from South Africa and Angola, Dr Okonjo-Iweala, unveiled her candidacy at a press conference in Pretoria, on Friday.
Her candidacy is backed by Africa’s leading economies and its two biggest oil producers in a push for greater influence at global financial bodies dominated by rich nations.
According to the two-time Minister of finance, “I consider the World Bank a very important institution for the world and particularly for developing countries deserving of the best leadership,” she said.
“So I look forward to a contest of very strong candidates, and am I confident? Absolutely” she added emphatically.
Her bid was unveiled in the South African capital, hours before the deadline for nominations to succeed current president Robert Zoellick, who is stepping down at the end of his term on June 30.
Former Colombian finance minister and central bank chief, Jose Antonio Ocampo, who has also been tipped to assume the office, announced his candidacy on Wednesday. Washington has yet to announce its own candidate for the office which American has held since it was founded nearly 70 years ago.
Okonjo-Iweala is a respected former World Bank managing director who joined the Goodluck Jonathan administration as finance minister in August. A capacity she once served during the regime of President Olusegun Obasanjo after which she was transferred to the Ministry of foreign affairs before her resignation.
“I have long experience in the World Bank, in government and in diplomacy and I look forward to giving you my vision at the appropriate time,” she said.
“I share the World Bank vision of fighting poverty with passion. The issue is in what direction one must take this to make this the most beneficial,” she said.
The World Bank has 187 member nations and focuses its activities on development loans.
Under a tacit agreement since the World Bank and its sister institution the International Monetary Fund were founded, the United States always selects an American as World Bank president and Europe puts a European at the IMF helm.
That traditional arrangement has triggered outrage from developing and emerging economies seeking greater representation to reflect their rising contributions to the global economy.
The US Treasury in February declared “the United States continues its leadership role in the World Bank,” as the largest shareholder, and would announce its candidate “in the coming weeks.”
Since then, the Treasury has declined to comment on the nomination process.
Secretary of State Hillary Clinton has long been among the most circulated names rumoured to be under consideration by President Barack Obama, along with UN ambassador Susan Rice, Democratic Senator John Kerry and former Treasury secretary Larry Summers.
Clinton has insisted that she is not interested in the job. Another American, economist Jeffrey Sachs, has garnered support for his self-declared candidacy in small developing countries.
Sachs, the director of the Earth Institute at Columbia University, has a decades-long career in development and poverty eradication and headed the United Nations’s Millennium Development Goals project.
A candidate must be presented by the Bank’s 25 executive directors, or by governors through the director representing them on the executive board.
The World Bank said that if there are more than three candidates, it will release a short list of three candidates but did not indicate the timing of the publication.