Moody’s improves Brazil rating outlook
Credit rating agency Moody’s raised its outlook for Brazil’s public debt. The country’s sovereign rating was kept two notches below investment grade (the investment grade serves as a guarantee that the country is not likely to default), but with a positive outlook, which indicates the classification can be revised upwards next time.
In a statement released Monday afternoon (Apr. 26), the agency named two reasons for the improvement: the increased likelihood that the next administration may approve fiscal reforms, like the pension reform, and higher-than-expected growth in the short and medium terms.
“In short, Moody's believes that the downside risks to growth and uncertainty regarding the reform momentum that led to the assignment of the negative outlook to the Ba2 rating in May of last year have receded,” the statement reads.
In a note, the Brazilian Finance Minister restated its commitment to restoring balance in public accounts and economic recovery. A number of measures have been taken in the last few years which led up to the improvement, the note adds.
“The Ministry of Finance attributes the improvement in the assessment to the actions carried out by the economic staff since May, 2016. In addition to the efforts to reestablish fiscal balance, the wide-ranging overhaul agenda in progress plays a fundamental role—particularly the approval of a cap for public spending, the labor reform, the Program for the Fiscal Recovery of the States, the reopening of the oil and gas sector, and the redesign of credit policies with the BNDES [Brazil’s Economic and Social Development Bank], and the TLP [long-term rate],” the official text says.
Other agencies
Other internationally recognized credit rating firms lowered Brazil three notches below investment grade early this year.
In January, Standard & Poor’s cut its grade for Brazil after Congress decided to put off the vote on the pension reform and the fiscal adjustment measures enacted late last year. In February, Fitch also decreased its grade for the country.
Translated by Fabrício Ferreira
Fonte: Moody’s improves Brazil rating outlook
