NEW YORK, October 4, 2008 (AFP) – Combined US government debt is set to rise to levels unseen since the 1950s, but the United States should nevertheless be able to hold onto its AAA credit rating, the Fitch ratings agency said.
“If all fiscal commitments announced to date materialize and are full by the end of 2009, the general (i.e. federal plus state, regional and local) government fiscal deficit would rise to 10 percent of GDP in 2009 and general government gross debt would exceed 70 percent of GDP for the first time since the 1950s,” it said in a statement.
“The United States will likely overtake France and Germany to become the most indebted ‘AAA’ rated sovereign next year,” added Brian Coulton, managing director in Fitch’s sovereigns rating group.
“Nevertheless, there is sufficient headroom within the tolerances of the US AAA rating to absorb a sizeable near-term fiscal deterioration arising from measures to stabilize the financial system and prevent an excessively deep and prolonged recession.”
Fitch said US government support for the financial sector — including the 700-billion-dollar Troubled Asset Relief Programme adopted Friday — did not fundamentally alter its current perspective on the AAA sover