Obama Reid
Obama with Senate Majority leader Harry Reid during a recent summit meeting in the White House [Reuters].

The US Senate has reportedly reached an agreement to extend the country's debt ceiling, hours before the existing limit expires.

Although no deal has yet been announced, the BBC claims that a deal will be revealed in Congress imminently.

Earlier reports suggested Congress was frantically finalising a bill to raise America's debt ceiling, extending the federal borrowing window until 7 February.

Sources in Washington claim the agreement will make only minor tweaks to President Barack Obama's flagship public healthcare policy, which has been a key bone of contention between Republicans and Democrats in the American legislature.

While Obama is keen to push through a package of reforms to health insurance, which have been grouped together under the popular label 'Obamacare', the Republicans in Congress have attempted to block his plans, precipitating the current impasse.

Earlier it had been reported that Fitch was considering slashing America's AAA credit rating over fears that Congress would miss the cut-off time and the government would be forced to default on its debt.

At a soup kitchen in Washington DC on 14 October, Obama warned that the country is at risk of default.

"This week if we don't start making some real progress, both the House and the Senate - and if Republicans aren't willing to set aside their partisan concerns in order to do what's right for the country - we stand a good chance of defaulting," he said.

"And defaulting would have a potentially devastating effect on our economy."

Hundreds of thousands of federal employees were forced to go on unpaid leave and government offices closed, after the Senate failed to pass the budget for 2014. The opposing Republicans wanted Obama to delay or eliminate his signature healthcare programme in order to pass the bill.

The IMF and World Bank warned that the ongoing government shutdown and debt ceiling crisis will result in grave consequences for the global economy.