NIIGATA, Japan - Treasury Secretary Janet Yellen on Saturday called the showdown over raising the U.S. debt ceiling "more difficult" than in the past but said she remained hopeful a solution could be found to avert a first ever U.S. default

Yellen told Reuters in an interview on the sidelines of a meeting of Group of Seven finance officials in Japan that she hoped to update the U.S. Congress within the next couple of weeks about when exactly Treasury would run out of funds to pay the government's bills.

She has called repeatedly for Congress to agree to raise the $31.4 trillion cap on federal borrowing to avert the "economic and financial catastrophe" that would ensue if the United States defaulted on its debts.

Last week, she told lawmakers that Treasury could run out of money to pay all the government's bills as early as June 1 - and likely in early June - unless Congress raised the debt limit. She offered no update on Saturday.

President Joe Biden, a Democrat, insists Congress has a constitutional duty to raise the ceiling without conditions to fund previously approved spending. Republicans, who control the House of Representatives, have tied their agreement to increase the cap to sweeping budget cuts.

Unlike most developed countries, the U.S. sets a ceiling on how much it can borrow. Because the government spends more than it takes in, lawmakers must periodically raise that cap.

Yellen said the first major standoff over the debt ceiling since 2011 reflected continuing U.S. polarisation after the presidency of Donald Trump and raised concerns about U.S. relationships and standing in the world.

"It’s certainly not a positive for relationships and standing in the world and credibility," she said. "Maybe this time is more difficult, but I'm hopeful that this one will end in the same way others have, namely that we will find a solution. That’s what we’re focussed on."

Yellen said it was a positive sign that "pretty much everyone" who attended a meeting Biden hosted with congressional leaders on Tuesday had agreed it would be unacceptable for the United States to default.

She said Biden was planning on attending the G7 summit starting on Friday in Hiroshima and viewed it as a priority, but noted he has said he could cancel the trip if there was not sufficient progress on ending the debt ceiling impasse.

Despite concern over the debt ceiling fight, Yellen said she remained convinced that the Biden administration had re-established U.S. leadership in the world and other G7 leaders were grateful that they had turned "the dial 180 degrees relative to the Trump administration."

(Reporting by Andrea Shalal in Niigata; Editing by William Mallard)