The rating agency Moody’s maintained the rating of Brazilian public debt, with a stable outlook, with no chance of changes soon. The decision was made public in the late afternoon of Tuesday (12).
The stable outlook means the agency does not intend to change the country’s rating in the next review. Currently, Moody’s gives Brazil a Ba2 rating, two levels below investment grade, a guarantee that the country is not at risk of defaulting on its public debt.
In a statement, the agency explained that the maintenance of the Brazilian public debt rating is justified by three factors. The first were structural changes in fiscal and monetary policies adopted in recent years, with emphasis on the autonomy of the Central Bank and the Social Security reform.
The second factor was the improvement in public accounts. With federal revenue hitting a record, the government has been running lower primary deficits. According to Moody’s, this will soften the impact of rising interest rates on public debt. The third reason for maintaining the rating was the large volume of Brazil’s international reserves, which strengthens the country’s foreign position.
“The stable outlook reflects Moody’s expectations that recent fiscal and monetary policy reforms are structural in nature and will largely be preserved, against the risk of fiscal slippage and the impact of weak growth on fiscal consolidation.” , the agency said in a statement.
According to Moody’s, Brazil showed strong resilience after the worst phase of the covid-19 pandemic, with the Gross Domestic Product (GDP) growing 4.6% in 2021. The agency considers that the country has resumed the momentum in relation to the approval of structural reforms of the economy and praised reforms that reduced bureaucracy in the business environment, divestment in federal government assets (concessions and privatizations) and increased private investment in the infrastructure sector.
As of early 2017, Moody’s has rated the country two levels below investment grade. The rating is better than other agencies. Since January 2018, S&P Global has classified Brazil three levels below investment grade, the same rating given by Fitch, another of the main risk rating agencies.
