The country's economic activity declines 0.1% in the third quarter

Fitch raises Brazil rating outlook from negative to stable

The rating agency Fitch raised the outlook for the Brazilian public debt rating from negative to stable. The decision was released on Thursday afternoon (14) and means that the agency does not intend to change the country’s rating in the coming months or years.

In May 2020, shortly after the start of the covid-19 pandemic, Fitch kept Brazil with a negative outlook. Currently, the agency grants the country a BB- ​​grade, three levels below investment grade, guaranteeing that the country is not at risk of defaulting on public debt.

In a statement, Fitch said the decision “reflects better-than-expected developments in public finances amid the successive shocks of recent years, since we assigned the negative outlook in May 2020.” That’s because, after record government spending in 2020, public accounts improved in 2021 and 2022.

The risk rating agency highlighted that, in 2021, Brazil recorded the first primary surplus (saving resources to pay public debt interest) since 2013, according to the Central Bank’s criteria. Last year, the consolidated public sector (Union, states, municipalities and state companies) obtained a primary surplus of 0.75% of the Gross Domestic Product (GDP).

Fitch also projects a drop in government debt in 2022. According to the agency, the ratio between General Government Gross Debt and GDP should end the year at 78.8%, after being at 80.3% last year and reach the record level of 88.6% in 2020 because of the spending on the covid-19 pandemic.

Despite recent developments, Fitch highlighted that the improvement in public accounts occurred in the short term. For the process to be sustainable, the agency recommends the approval of structural reforms in the Brazilian economy.

In a statement, the Ministry of Economy said that it “reaffirms its commitment to the fiscal consolidation necessary for the continuity of the economic recovery scenario”.

The last time Fitch had downgraded Brazil’s rating was in February 2018, when the country’s rating was reduced to three notches below investment grade. This is the same score given by the Standard & Poor’s (S&P)another of the top rating agencies.

THE Moody’s ranks the country two levels below investment grade. Both S&P and Moody’s assign a stable outlook to the Brazilian debt rating. Only Fitch has maintained the negative outlook so far.Fitch raises Brazil rating outlook from negative to stable

Source link

Previous Story

Minsal points out that a fifth dose against Covid-19 will not be incorporated into the entire population immediately, if necessary

Latest from Brasil