Brazil can achieve investment grade (seal of good public debt payer) by 2026, under the current government, said this Tuesday (1st) the Minister of Finance, Fernando Haddad. The minister commented this evening on the increase in the country’s public debt rating by the Moody’s risk rating.
With Moody’s decision, which improved Brazil’s rating from Ba2 to Ba1, Brazil is one level below investment grade. The other two main agencies, Fitch and S&P Global, keep the country two levels below investment grade.
“I think that if the government as a whole understands that this effort is worth it, that this effort that is being made produces the best results and we continue without letting our guard down in relation to expenses, in relation to revenues, doing our work, I really believe that we have the chance to complete President Lula’s term by regaining investment grade. It is not given, but it is a concrete possibility”, declared Haddad upon leaving the ministry.
In the minister’s assessment, Moody’s statement “is in line” with the work of the economic team over the last two years. “If we continue to persevere on this path of fiscal and monetary adjustment, we have a great chance of achieving stability in the debt/GDP ratio and public spending after many years of fiscal imbalance”, commented the minister.
Without mentioning specific measures, Haddad said that, after the government increases revenues, “there is still work to be done” in relation to expenses. According to him, the rebalancing of public accounts will allow the country to reduce interest rates that correct the government’s debt and achieve investment grade, which was no longer granted to Brazil in 2015.
Moody’s decision comes a week after Haddad and President Luiz Inácio Lula da Silva met with representatives of the main risk rating agencies during an official trip to New York. The two met with representatives from Moody’s, Fitch Ratings and S&P Global.
In a statement, Moody’s cited the “significant” improvement in the country’s credit. According to the agency, this is due to the “robust” growth of the Gross Domestic Product (GDP, the sum of goods and services produced) and recent economic and fiscal reforms, such as tax reform, which will improve the business environment and the allocation of taxes. .
The agency also mentioned the energy transition plan as a factor that attracts private investment and reduces the country’s vulnerability to climate shocks.
