Reference News Network reported on April 25 that according to a report from the US The Hill on April 24, Moody's Ratings announced this week that it had downgraded the credit rating of Washington DC, the US capital, against the backdrop of large-scale layoffs in the federal government and local economic impacts.
In a new report, Moody's said it would downgrade the area's issuer credit rating from Aaa to Aa1, which is a blow to the city and may increase the borrowing costs for the local government and lead to higher costs for taxpayers.
The report stated that the reason for the downgrade was "the increasing negative pressure on the district's economy and finances due to reduced federal spending, layoffs, and the downturn in the real estate industry."
Analysts pointed out that due to the Government Efficiency Department's reduction of federal employees, it is expected that Washington DC will lose 40,000 workers over the next four years. Moody's said that the loss of workforce would "erode" the traditionally stabilizing role of the federal government on the city and its economy.
Glenn Lee, the District's chief financial officer, said in a statement that the change in ratings was due to broader decisions by the federal government regarding its employees and expenditures, as well as economic trends beyond the region's control, which disproportionately affected the local economy.
Moody's noted in its report that it has a negative outlook for Washington DC because federal spending and federal employees may be further cut, and the city is already experiencing a recession.
Moody's said that it is unlikely to upgrade Washington DC's rating within the next 12 to 18 months. However, if Washington DC can absorb laid-off federal employees into the private sector and resources do not decline, its rating could be upgraded from negative to stable. (Compiled/Clifford)
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