Washington, Dec 17 (IANS): US President Joe Biden has signed into law a legislation that provides for the authority to increase the federal government's debt limit by $2.5 trillion, averting a looming debt default.

The move came on Thursday after US Congress on Wednesday morning gave a final approval to the measure that would raise the debt limit to roughly $31 trillion, which would cover the federal government's borrowing through 2023, Xinhua news agency reported.

"We're relieved policymakers agreed to raise the debt ceiling rather than putting the country's full faith and credit at risk. But this was way too last minute and brought our economy too close to the brink," Maya MacGuineas, President of the Committee for a Responsible Federal Budget, said Thursday in a statement.

"Washington now has a couple years before we next have to raise the debt ceiling. Before then, lawmakers should turn their attention to the hard work of developing a plan to start dealing with our problematic debt levels. Both parties are responsible for our near-record levels of debt, and they will need to work together to fix it," MacGuineas added.

The Bipartisan Policy Center, a Washington, D.C.-based think tank, estimated earlier in December that the federal government could be unable to pay its bills as soon as December 21 if Congress fails to raise the debt limit.

Failure to pay the nation's bills on time could send immediate ripple effects throughout the global economy, particularly during a time of economic recovery and heightened uncertainty over a new Covid-19 variant, the think tank warned.

The debt limit, commonly called the debt ceiling, is the total amount of money that the US government is authorized to borrow to meet its existing legal obligations, including social security and medicare benefits, interest on the national debt, and other payments.