Fitch Ratings – one of the world’s “Big Three” credit rating agencies – has removed the United States from its position among the very highest tier of long-term lending counterparties.
The nation’s Long-Term Foreign-Currency Issuer Default Rating (IDR) slid from AAA to AA+ on Tuesday, prompting criticisms against Fitch from both the U.S. Treasury Department and the White House.
Why The Downgrade?
According to Fitch, the downgrade reflects expectations of “fiscal deterioration,” the country’s “growing general government debt burden,” and an “erosion of governance” regarding how to manage that debt relative to its AA and AAA-rated peers.
Firstly, the government deficit has been rising over time and is expected to reach 6.3% by the end of 2023, versus 3.7% at the end of 2022. Fitch attributes the expected rise to “weaker government revenues, new spending initiatives, and a higher interest burden.”
“Fitch forecasts a GG deficit of 6.6% of GDP in 2024 and a f
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