Standard & Poor’s maintains the debt of Brazil away from investment grade – Economíahoy.mx

AFP – 6:47 – 11/02/2017

• Your rating remains BB, as it had been a year ago

The rating agency Standard & Poor’s (S&P) announced Friday that maintains the note of the sovereign debt of Brazil, two rungs below investment grade, with negative outlook, due to the strong challenges that continues to face the economy in recession, the south american giant.

Your score remains, therefore, of BB, as it had been a year ago after the last downgrade. “The substantial fiscal challenges and economic in Brazil, they imply a strong commitment in the policy,” said S&P in its press release, in which he pointed out as still insufficient the measures of the new government.

“Despite the progress in the medium term the fiscal adjustment in the administration of [the conservative president Michel] Fear, the persistent political uncertainty, intensified fiscal pressure on local governments and a weak economy lead to a slow and prolonged adjustment” added the note.

Standard and Poor’s withdrew the investment-grade debt brazilian in September 2015, becoming the first of the major rating agencies to do so. Later, he would follow Fitch and Moody’s, as the largest economy in Latin America is collapsing.

The brazilian GDP shrank by 3.8% in 2015 and, according to estimates, would have fallen to 3,5% in 2016, which would result in its first biennium of recession since the 30′s.

by 2017, the Central Bank projected a modest economic growth of 0.8%, while the market expected a reduced expansion, by 0.5%.

Taking into account the timid signals of recovery in a scenario where the main macroeconomic indicators are still in red -for S&P’s government debt will rise from 52% to 67% between 2017-2019, and its deficit will be 7%-, the agency decided to keep also the negative perspective of the note.

In this way, there is a third possibility for the rout again in the next few months, full of uncertainties in Brasilia.

“The negative outlook reflects the risk that the government’s strategy to stabilize the economy and its fiscal position may be undermined by the political dynamics after three years of recession and the potential consequences of the corruption investigations,” says the agency.

With a record unemployment of 12% in the last quarter of 2016, the conservative government of president Michel Fear fight to reroute the economy.

last year got Congress to pass a freeze in public spending for 20 years and was sent for treatment to a reform of the pension system.

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