U.S. President Barack Obama has said he had reached a deal with Republican and Democratic leaders to raise the nation's debt ceiling by at least $2.1 trillion and avoid default.
"I want to announce that the leaders of both parties, in both chambers, have reached an agreement that will reduce the deficit and avoid default - a default that would have had a devastating effect on our economy," Obama said at the White House on Sunday night.
Obama said the agreement would cut about $1 trillion in federal spending over a decade and establish a bipartisan committee to report by November with a proposal to further reduce the U.S. deficit.
The proposed legislation is expected to be put to a vote in Congress later on Monday.
With congressional leaders facing an August 2 deadline to raise the debt ceiling above its current $14.3-trillion limit after weeks of frustrating negotiations, Obama urged the parties to back the plan and stressed that the "ultimate solution" must be "balanced."
Obama said that while it was not the deal he would have preferred, it would make a "serious down payment" on the deficit reduction.