S&P: Brazil's 'solid fundamentals' to persist

Standard & Poor's said it issued a commentary that finds that the solid fundamentals in fiscal and external accounts that the Federative Republic of Brazil (BB-/stable/B foreign currency, BB/stable/B local currency) has achieved over the last several years are expected to continue despite adverse and ongoing political developments and allegations of corruption in political processes.

The article, "The Forest For The Trees: Looking At Political Developments In Brazil Within The Context Of Its Institutional Framework And Solid Fundamentals," reveals that Brazil's ratings and outlook assume ongoing prudent policy actions by President Luiz Inácio Lula da Silva's government and presume that Brazil's institutional processes maintain integrity in the midst of current political turmoil, S&P said.

"The current political context renders passage of controversial pieces of legislation or reform more difficult, although given Brazil's electoral cycle the expectation of limited progress is already incorporated in the ratings," said S&P credit analyst Lisa Schineller.

"The ratings, however, do assume continued commitment to prudent macroeconomic policy by the current and future governments and appropriate and adequate policy response to internal or external shocks. Should policy commitment falter, the rating and/or outlook could be affected."

According to Schineller, strengthened fiscal and external fundamentals during the past several years better enable Brazil to withstand adverse shocks.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.