S&P Raises Brazil to BBB

S&P has raised Brazil’s long-term foreign currency rating to BBB from BBB minus, citing the government’s cautious fiscal and monetary policies and its ability to weather external shocks. “S&P’s decision to upgrade the Brazilian credit rating at a sensitive time in the international economy is recognition that the country’s economic policy is in the right direction and that its macroeconomic fundamentals are sound,” Brazil’s ministry of finance said in a statement. .S&P praises the government’s response to inflationary pressures this year, sending what it calls an “important signal about its policy flexibility and commitment to economic stability.” Thanks to budget cuts and the government’s ability to contain increases in pension spending, the consolidated public sector primary surplus this year is expected to hit 3.15% of GDP, the agency says. However the agency believes that efforts to increase private-sector investments will be a key challenge for the country. “Implementing a vigorous agenda of economic reforms that boost investment and GDP growth would give Brazil greater policy flexibility and lower real interest rates and, in turn, could lead to an upgrade,” it says.