On Friday, Moody’s ratings lowered the long-term transmitter and the US united higher notes from AAA to AA1. This demotion represents the first body in which the United States has given up its highest credit rating of a credit rating agency.
This decision was based on the continuous accumulation of debt in successive administrations. In a recent update of social media, Gurmeet Chadha, general partner and CIO at Compriccle, stressed the fact that Moody’s took a considerable time to recognize that the American credit rating is not AAA.
For years, agencies like Moody’s, S&P and Fitch have been accused of having looked at the assembly of American debt, the dead ends of the repeated debt ceiling and unsustainable budgetary practices. Experts have criticized that these same agencies are often quick to issue downshifts or red flags for emerging economies on much lower concerns.
“Moody’s has taken so many years to realize that the notation of American credit is not AAA … The world realizes that the UN international rating agencies, which, WTO, IMF, – all these organizations are useless and biased. They have their own agenda,” noted Chadha in a post X.
Moody’s is the most recent of the three main credit rating agencies to reduce its assessment of the solvency of the federal government. The first Federal Debt of Standard & Poor lowered in 2011, followed by Fitch Ratings in 2023.
Moody’s projected into a press release that federal deficits should expand, approaching almost 9% of the US economy by 2035, an increase of 6.4% in 2024. This growth is mainly motivated by the increase in interest payments on debt, increased rights and relatively low revenue generation.
The prospects of the United States have gone from negative to stable, which indicates budgetary challenges resulting from more than ten years of increasing public debt and interest expenses. This update follows the recent IPC report in April, which showed a drop in inflation following President Donald Trump’s tariff strategies. The degraded underlines a drop in the affordability of the debt compared to the other highest rated entities.
Chadha has also added that more and more people around the world question the relevance and impartiality of international organizations such as the United Nations (UN), the World Health Organization (WHO), the World Trade Organization (WTO) and the International Monetary Fund (IMF).
These institutions, initially established to promote world peace, health, fair trade and financial stability, are now largely considered to be politicized, ineffective and often aligned with the interests of some dominant nations.
Recently, the decision of the International Monetary Fund (IMF) to pay $ 1 billion to Pakistan through prolonged funds (EFF) and an additional $ 1.4 billion through the installation of resilience and sustainability (RSF) has been the subject of intense control. This occurs shortly after a terrorist attack in the cashmere Pahalgam and in the middle of the growing tensions between India and Pakistan.
Critics, including Indian officials, strategic experts and the voices of the region and beyond, have raised concerns about the time of disbursement. Many believe that this could potentially hinder efforts to defuse the situation. The total payments within the framework of the program is now $ 2.1 billion, the RSF funds supposed to help Pakistan fight against climate -related vulnerabilities.
It should be noted that India has chosen to refrain from voting at the meeting of the IMF board of directors, demonstrating its opposition within the limits of the IMF protocol. Unlike the United Nations, where countries have the possibility of voting, the members of the IMF board of directors are limited to voting in favor or to abstain – there is no official mechanism for outright rejection.
India has constantly argued that Pakistan constantly abuses the assistance of the IMF. Over the past 35 years, Pakistan has participated in 28 IMF programs, including four in the past five years. However, there has been a minimum of progress in terms of implementing structural reforms or achieving sustainable economic stability. Former Foreign Affairs Secretary Kanwal Sibal described the IMF’s decision as “terrible optics” and reported his Western bias.
Yashwant Deshmukh said the fund “had blood on his hands”, while Suvering Sareen accused her of burying the Pakistani army.
