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Experts warn of world crisis if US defaults on debts

Urge lawmakers to increase borrowing limit

Heads of various financial institutions have warned of serious repercussions in the world market if the US defaulted on its debts.

They have urged the lawmakers to extend the debt limits by Thursday deadline in order for the US Government to have enough funds to honour its commitments.

Republicans and Democrats deliberated on Saturday ways to avoid a crisis being faced by the country, but are yet to come to a consensus. A proposal to give a short-term extension to the borrowing limit was rejected by the government.

Meanwhile, Christine Lagarde, chief of International Monetary Fund, told ABC in an interview that US default might push the world back into recession.

Lagarde was quoted by BBC as telling ABC, "If there is that degree of disruption, that lack of certainty, that lack of trust in the US signature, it would mean massive disruption the world over and we would be at risk of tipping yet again into recession."

BBC cited Jim Yong Kim, president of World Bank, as saying that the US is "days away from a very dangerous moment".

"The closer we get to the deadline the greater the impact will be for the developing world.

"Inaction could result in interest rates rising, confidence falling and growth slowing." Kim said.