Jack Lew: US could default on debt by 'end of month'

Mr Lew said now was not the time to cut the US government's budget dramatically

US Treasury Secretary Jack Lew has warned the US may default on its debt by the end of the month if Congress does not raise its borrowing limit.

Mr Lew said he could rely on emergency measures to pay US debts after the limit is reinstated on 7 February.

But he anticipated the treasury's reserves would quickly be exhausted as it issues annual income tax refunds.

Congress suspended the debt limit in October as part of a deal to reopen the federal government after a shutdown.

The $16.7tn (£10.2tn) cap will be reinstated on Friday.

"Without borrowing authority, at some point very soon, it would not be possible to meet all of the obligations of the federal government," Mr Lew said at the Bipartisan Policy Center in Washington on Monday.

The treasury secretary said the US treasury department could resort to accounting mechanisms to avoid breaching the limit until the end of February.

But soon after, the US will only be able to pay its debt and other obligations with cash on hand.

And in the spring, Mr Lew noted, the US issues tax refunds to Americans who overpaid income taxes last year, straining its cash reserves.

While Republicans have in the past demanded budget cuts in return for agreeing an increase in the borrowing limit, the party's leaders have signalled reluctance to do so this time around.