{{Top finance officials from the G20 leading economies looked set to keep their focus on the receding risk of a U.S. default at talks on Friday as hopes grew that Washington could soon clinch a stop-gap deal to ensure it can keep paying its bills.}}
Officials from across the Group of 20 nations had warned that a failure by the U.S. Congress to raise the nation’s $16.7 trillion debt ceiling would wreak havoc on the global economy.
The U.S. Treasury has said it could quickly run out of cash if the cap is not raised by October 17. A failure to lift it, officials warned, could spark a financial crisis and tip the world’s largest economy into recession with damaging repercussions that would be felt worldwide.
But that risk receded on Thursday as Republicans presented a plan to extend the nation’s borrowing authority, opening a door for talks with the White House. Republicans have sought to use the need to raise the debt limit as leverage to force the White House to agree on budget cuts or to force changes in Obama’s signature health care law.
U.S. Treasury Secretary Jack Lew and Federal Reserve Chairman Ben Bernanke assured their G20 counterparts at a dinner on Thursday that a resolution would be reached in time.
“They said that the problem will be solved by the 17th,” Anton Siluanov, finance minister of this year’s G20 host Russia, told reporters. “Both Lew and Bernanke believe that these difficulties can be overcome soon.”
Talks between the White House and Republican lawmakers pushed late into the night, but signs of progress earlier had already fueled the biggest Wall Street rally since January 2.
“It is quite clear that America has been pulled back from the brink, as sensible people expected,” Australian Treasurer Joe Hockey told reporters ahead of the dinner of top finance officials from the G20 developed and emerging economies.
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