It’s not often one hears good news from anywhere in Latin America. Moody’s, the credit rating agency, has just changed its outlook on Brazil to positive from stable, an early warning that it is considering an upgrade. This is a well-deserved announcement for a government that has been doing the right thing for years. Most announcements from rating agencies these days are negative: Moody’s has put both Uruguay and Venezuela on creditwatch for a downgrade.
Although Brazil has a heavy debt burden, it shrugged off any threat of contagion from Argentina a long time ago. Indeed, the dreadful example of Argentina has put the lid on any further discussion in Brazil of “reprogramming” the public sector debt. Brazil is one of the few economies still growing in Latin America. The government of President Fernando Henrique Cardoso is more popular than ever in spite of its tough fiscal policy.
Moody’s says its impressed by “the country’s growing resilience to shocks and regional contagion,” and notes the “beneficial impact of several years of progress in solidifying the gains from fiscal adjustment.”
Brazil elects a new president in October to take over from Cardoso, who has run the country since 1994. It would be a good sign to the outside world if the Brazilians pick a new leader who is committed to continuing Cardoso’s policies. It would be even better if those policies finally deliver growth and prosperity for all.