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US Must Not Wait Until Last Minute to Lift Debt Ceiling, Treasury's Lew Warns

Friday, 10 May 2013 07:13 AM

The United States must not delay raising its debt ceiling as ensuing uncertainty would hurt both the U.S. and the global economy, U.S. Treasury Secretary Jack Lew said in an interview on CNBC television on Friday.

"The debt limit will be reached in just a few days when it expires on May 18 but because of the cash flows, we can predict that we will be OK until Labor Day," Lew said.

"People shouldn't relax," he said. "Congress should deal with this right away. The fact that they have more time should not put off dealing with this," he said.

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"The uncertainty caused by putting this off is not good. The anxiety caused to the U.S. and world economy by putting this off until the last minute is not good," he said.

"I don't think that it's in the interests of the U.S. or the world economy for Congress to wait until the last minute and create a sense of anxiety. Congress has to raise the debt limit."

Lew said the global economy would continue to heal. "The economy is healing — certainly in the U.S., I think that there are many challenges ahead. It's an important time to ask the question what we can all do to create more growth and more jobs," he said.

Lew also said that Japan had "growth issues" but its attempts to stimulate its economy need to stay within the bounds of international foreign exchange agreements.

"Japan has growth issues for a long period of time that we have encouraged Japan to address. So as long as they stay within those bounds of those international agreements I think growth is an important priority," Lew said.

"I'm just going to refer back to the ground rules and the fact that we've made clear that we'll keep an eye on that," he added.

The yen hit a four-year low against the dollar earlier on Friday beyond the psychologically important 100 yen mark. Lew was speaking ahead of a meeting global finance chiefs, where the yen's slide is expected to be a topic of discussion.

Lew also said some European countries had more fiscal space to create demand, and warned that global economic recovery could not be led by the United States alone.

"For a global recovery ... It cannot be led by the United States alone ... There are countries in Europe that have more fiscal space in Europe to create a bit more economic demand and more economic growth," he said.

"I've been engaging with the Europeans since I've become Secretary…We feel strongly that there needs to be the right balance between austerity and growth. We're not arguing whether we need to get our fiscal house in order, we all need to do that, the question is when and how," he said.

"Some countries have more 'fiscal space' to create demand and create growth," he said. "We've seen progress on the easing off of certain deficit deadlines and the making of structural reforms and we need to see more of that."

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