(MENAFN) Moody’s has downgraded the United States' credit rating from its perfect triple-A (AAA) status, citing growing worries about the country’s ability to afford its debt.

This marks the first time since 1917 that the agency has lowered the nation's sovereign credit rating, which had previously held the highest rating available.

This decision aligns Moody's with other major credit rating agencies.

In August 2023, Fitch Ratings downgraded the US to AA+ from AAA, and in 2011, Standard & Poor’s reduced the rating to AA+ from AAA as well.

The reduction to Aa1 “reflects the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns,” based on a statement from Moody's.

The agency also pointed out that various US administrations and Congress have failed to reach an agreement on policies to address the persistent problem of large yearly fiscal deficits and increasing interest expenses.

Despite the downgrade, Moody's emphasized that the United States still holds considerable credit strengths, such as its large economy, resilience, dynamism, and the global dominance of the dollar as a reserve currency.

Earlier this month, Treasury Secretary Scott Bessent cautioned that the US could face a potential default by August unless the debt ceiling – a legal cap on government borrowing – is raised or suspended to ensure that the government has enough funds to cover its expenses.

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