Levy admits Brazil may downgrade rating and lose investment grade
According to Levy, "the economic goals have been heavily influenced by external factors, including the political factors," the minister pointed out. 
Finance Minister Joaquim Levy admitted today (Dec. 10) that Brazil may lose investment-grade rating and have credit risk downgraded by credit rating agencies.
"The downgrade issue reflects the reality. It's like a football championship: if we are not organized, it is not possible to achieve unity and the result is serious. Of course, we have to work and try to get back to the league to which we think we belong," said the minister, after attending a year-end luncheon sponsored by the Brazilian Federation of Banks (Febraban).
On Wednesday afternoon (Dec. 9), Moody's announced to have changed to negative the country's outlook. If downgraded, Brazil will lose investment-grade rating, which indicates the risk level for sovereing debt. According to the Moody's, the political uncertainty—after Congress initiated impeachment proceedings against President Dilma Rousseff's—complicates the passage of fiscal adjustment measures to reduce spending and raise taxes.
Currently, Moody's has placed Brazil's Baa3 issuer, the last investment-grade rating. In September, Standard & Poor's had strip Brazil of its investment-grade status. If a second agency cut the country's investment-grade, foreign investment funds will no longer be able to provide resources to Brazil, triggering capital outflows off the country.
However, Levy cushioned the downgrade impacts on public accounts, but pointed out that the government does not regard the possible loss of investment status as "normal". "The government's foreign debt, which is the one registered at the rating [risk management], is relatively small. A ratio of 1/15 of our foreign-exchange reserves. So there's no risk for not wanting or not being able to pay this debt. "
"On the other hand, our internal debt is growing, which indicates how important it is to undertake some reforms to allow Brazil to become peaceful and recover growth," added the minister. For that reason, Levy defended the dialogue and unity with Congress to obtain the approval for fiscal adjustment measures. "We need unity, we need to think first and foremost about Brazil. At the end of the year, I think that's what we need to do. "
According to Levy, "the economic goals have been heavily influenced by external factors, including the political factors," the minister pointed out. He noted that measures related to tax issues must be voted this year to come into force in 2016. "And we need to clearly indicate that they will be voted and decided until the end of the year."
Levy also defended more structural measures, with the pension reform and also to allocate resources for temporary extra revenue "to build a bridge to reach fiscal stability."
Translated by Amarílis Anchieta
Fonte: Levy admits Brazil may downgrade rating and lose investment grade
