Jim Yong Kim is president of the World Bank.
(Photo: Jack Gruber, USAT)
WASHINGTON - The president of the World Bank warned Tuesday that congressional maneuvering over raising the debt limit could have dire consequences on the global economy and the world's poorest people.
The effects of a default would be "really severe," Jim Yong Kim told USA TODAY's Capital Download, but even a period of uncertainty as the Treasury Department's Oct. 17 deadline approaches could unnerve stock markets and increase borrowing costs for developing countries.
"The notion that getting close to the 17th and then in the final minute doing something heroically, that will have an impact," he said in an interview at World Bank headquarters, where its annual meetings are being held this week. He issued a plea for members of Congress who are now debating what to do.
Some Republican lawmakers have expressed skepticism that failing to raise the debt limit necessarily would have catastrophic economic repercussions.
"Please consider politics beyond the Beltway, politics beyond your own districts," Kim said. "Really think about the impact that inaction can have on poor mothers in Africa, trying to feed their children. It will really have an impact on those mothers. It will have an impact on young men and women trying to create businesses in the Middle East. This is real. This is not a theoretical impact. It's very real."
In August 2011, when the debt ceiling was raised only at the last minute, the impact on developing countries was substantial and persisted for months, he said. "Right now, emerging economies and developing countries can't afford another set of headwinds in their effort to try to grow their economies."
A report from the International Monetary Fund Tuesday on the world economic outlook Tuesday warned that risks to the global economy were building, including likely damage from the extended U.S. partial government shutdown.
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