Moody’s downgrade not to impair investment, says budget minister

By Mariana Branco

Translated by Mayra Borges

Source: Agência Brasil

The Minister of Planning, Budgeting, and Management, Nelson Barbosa said that the downgrading of Brazil's credit rating announced Tuesday (Aug. 11) by Moody's rating agency will not “impair investment” in the country. The agency lowered Brazil's rating from Baa2 to Baa3. The revision retains the country's investment grade status awarded to countries regarded as safe for investment, but puts the country one level away from speculative grade, i.e. countries with uncertain credit quality. Moody's has also revised the outlook from negative to stable.

“We're working to regain the ability to achieve better fiscal results in a sustained way. The outlook for inflation is already much better for next year than it is for this year. As the results start to show up, they will ensure Brazil a favorable rating from investors,” Nelson Barbosa said on the official Ministry of Planning profile on Twitter.
According to Barbosa, some of the government initiatives to restore growth have started to yield results. Besides the lower inflation outlook for next year, he instanced an improvement in the trade balance results, which should close out 2015 in a surplus. The minister went on to say that improving the living standards of the population is the government's main purpose.
According to Moody's, the reasons behind the downgrading include lower-than-expected economic performance, growing government spending trends, and a lack of consensus on fiscal reform. In the agency's view, these factors will prevent the country from achieving sufficiently high primary surplus (savings to pay interest on debt) this year and in 2016. In late July, Standard & Poor's had revised the credit rating outlook for Brazil from stable to negative.


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