BEIJING, Oct. 17 (Xinhua) -- Dagong Global Credit Rating Co. Ltd., a Chinese credit rating agency, on Thursday downgraded the local and foreign currency credit ratings of the United States to A- from A, maintaining a negative outlook.
The decision came shortly after the U.S. Congress approved the resolution to end the partial government shutdown and raise the debt ceiling.
Although the U.S. federal government managed to avoid a default crisis for the moment, its solvency remains vulnerable as for a long time the U.S. government has maintained its solvency by repaying its old debts through raising new ones, said the agency.
"The government is still approaching the verge of a default crisis, a situation that cannot be substantially alleviated in the foreseeable future," Dagong noted, adding the partial U.S. government shutdown is an inevitable outcome of its long-term failure to pay excessive debts.
During the fiscal years from 2008 to 2012, the ratio of the federal government's stock of debts to fiscal income increased from 4.0 to 6.6, according to Dagong.
To avoid the debt default, the U.S. government has been taking advantage of the international currency dominance of the U.S. dollar to monetize its debts and has been taking quantitative easing monetary policy to maintain its government solvency, which directly damaged creditors' interests, said Dagong.
It estimated that the depreciation of the U.S. dollar caused a loss of 628.5 billion U.S. dollars for foreign creditors during 2008 to 2012.
Since President Obama's inauguration in 2009, the U.S. Congress has extended the debt ceiling five times, reaching a total volume of 5.1 trillion U.S. dollars.
"The latest raise of the debt ceiling shows the government's incapability in improving its solvency by improving the basic economic and fiscal elements," said Dagong.