USA: Biden and McCarthy reached an agreement in principle on raising the debt ceiling

US President Joseph Biden and Speaker of the House of Representatives Kevin McCarthy have reached an agreement in principle to raise the debt ceiling in the amount of 31 billion dollars, the Voice of America reports.

"Chairman McCarthy and I have reached an agreement in principle on the budget. It is an important step forward that cuts spending while protecting important programs for employees and growing the economy. The agreement protects both key priorities and legislative achievements of Democrats in Congress," Biden wrote on social network Twitter.

The US president pointed out that the agreement was a compromise in which none of the parties got everything they wanted.

"That is the responsibility that comes with the exercise of government. The agreement is good news for the American people because it prevents a catastrophic development that could have contributed to an economic recession, jeopardizing retirement accounts and millions of lost jobs. Over the next day, our negotiating teams will finalize the legislative text and the agreement will go before the House of Representatives and the Senate. I call on both chambers to confirm the agreement as soon as possible," said Biden.

The progress was made after a ninety-minute telephone conversation between Biden and McCarthy.

"I just finished talking to the president," McCarthy, a Republican, announced during the evening.

"Because he wasted his time and refused to negotiate for months, we reached an agreement in principle of the worthy American people. We have more work to do tonight in writing the law," McCarthy wrote.

He said that he expects the process to be completed on Sunday. After that, another conversation with Biden should follow, while the vote on the law in Congress would be held on Wednesday.

The agreement between the negotiators, Democrats and Republicans, will allow the United States of America (US) to continue borrowing in order to meet its financial obligations.

The reconciliation of the positions of the two parties was achieved before June 5, when the deadline expired.

Details of the deal are not yet known, but negotiators agreed to limit non-defense spending to 2023 levels over the next two years — in exchange for raising the debt ceiling over the same period.

Republicans who control the House of Representatives have pushed for sharp spending cuts, including some programs to help low-income citizens. They also demanded the confiscation of funds from the US IRS.

Otherwise, the balance of power in Congress is as follows: Republicans control the House of Representatives with 222 to 213 members. Democrats have a majority in the Senate: the number of members is 51:49 in their favor.

The Fitch Ratings agency put the US's perfect AAA credit on "negative under watch", warning that the government is at risk of a possible downgrade. The debt ceiling has been raised 78 times since 1960, including three times under Republican President Donald Trump.

Regardless, Fitch said it "continues to expect a resolution" regarding the current crisis over the debt ceiling and budget negotiations.

The government reached its existing borrowing limit in January, but the Treasury has since adopted "emergency measures" to keep paying the bills.

Without enough new tax revenue flowing into the coffers in the first days of June, the government would then face a difficult choice of which bills to pay.

Officials have warned that a default by the U.S., the world's largest economy, could prove catastrophic, roiling global stock markets, forcing firms to lay off U.S. workers and threatening U.S. creditworthiness, resulting in higher interest rates for borrowers.