Finance Ministry: cut of investment rating reflects difficulties in politics
Finance Ministry is convinced that Brazil has conditions to absorb the current negative shock in some items' prices of export products, in addition to fiscal imbalances resulting from increased public spending. This assessment was released by the Finance Ministry, after Fitch Rating cut Brazil's investment credit rating.
"[We need] to peacefully, but firmly, deal with the current public sector's financing needs and the reforms demanded to provide conditions to recover economic growth, in order to continue providing security to domestic and international investors and especially to Brazilian families," reads the Finance Ministry's note.
In the text, the ministry reiterates the confidence in the Brazilian economy's ability to recover the growth cycle. "Despite the short-term indicators and the current uncertainty, the Brazilian economy has strong and solid foundations," reads the statement.
"When Fitch Rating cut Brazil's investment rating, they consider the difficulties arising from the political environment and the government's ability and determination to implement measures to adjust the budget deficit in 2016, through policies aimed at consistent fiscal results following a path considered more benign to public debt. "On the other hand, the ministry noted that "Fitch pointed out the positive effects of exchange rate's flexibility throughout the year, reflected in the reduction of 33% in current account deficit. In fact, after the trade deficit registered in 2014, the Brazilian trade balance shall produce a surplus of $15 billion in 2015 and $31 billion in 2016 ".
According to the ministry, the Brazilian households' debt is low, which stimulates the recovery of consumption, resolving the doubts over the economic policy. "The industrial base is strong and diverse, able to instantly and strongly react to the new relative prices. Foreign trade has a broad and uniform geographical distribution, far surpassing commodities, despite the intense competitiveness of our agriculture. "
Moreover, the ministry further declared that "there was a real state bubble, which usually accelerates the cyclical correction of this strong market that creates so many jobs." "The Brazilian banking system is robust, well supervised and capitalized, which demonstrates remarkable ability to recover from shocks."
"Finally, the sectors of infrastructure and oil and gas, in which a large number of Brazilian and foreign companies participate with persistent success, have a considerable potential for growth, especially if benefited with improved relevant regulatory environment. The expansion of infrastructure helps stimulate demand in the short term and increase supply in the medium term with positive effects on the economy's productivity and on the population's welfare," read the Finance Ministry's note.
Translated by Amarílis Anchieta
Fonte: Finance Ministry: cut of investment rating reflects difficulties in politics
