BRASILIA, Jan 11 (Reuters) – Ratings agency Standard & Poor’s cut Brazil’s credit rating on Thursday as doubts grew about the result of a presidential election in October and a push to trim its costly pension system, seen as vital to closing a huge fiscal deficit.

S&P lowered its long-term rating for Brazil sovereign debt to BB- from BB previously, with a stable outlook, citing less timely and effective policymaking. S&P also said there was a risk of greater policy uncertainty after this year’s elections.

The decision underscored concerns that a business-friendly reform agenda proposed by the unpopular President Michel Temer may stall this year as a looming presidential race shortens the legislative calendar.

Brazilian Finance Minister Henrique Meirelles had met with ratings agencies to try and stave off a downgrade after the government delayed to February a vote on pension reform that had initially been expected last year.

The move by S&P brings its long-term sovereign rating for Brazil three notches below investment grade. Brazil is rated Ba2 by Moody’s Investors Service and BB by Fitch Ratings — both two notches into “junk” territory.

The S&P downgrade “is a negative development but it was expected, particularly after pension reform was delayed. It’s not breaking news for markets,” said Goldman Sachs economist Alberto Ramos in by telephone.

A spokesman for Brazil’s central bank declined to comment. The finance ministry did not immediately comment.

“This was already on the horizon as a possibility, given the process around the pension vote,” said Wellington Moreira Franco, secretary-general for President Michel Temer’s office. “I think it’s a warning of the economic and social consequences of not approving pension reform.” (Reporting by Jake Spring and Lisandra Paraguassu; Additional reporting by Bruno Federowski in Sao Paulo and Kanika Sikka in Bengaluru; Editing by Brad Haynes and Sandra Maler)

Sorry we are not currently accepting comments on this article.

Source link

Content Disclaimer 

This Content is Generated from RSS Feeds, if your content is featured and you would like to be removed, please Contact Us With your website address and name of site you wish to be removed from.


You can control what content is distributed in your RSS Feed by using your Website Editor.   If you are looking to make money from running your own business at home, visit the links below.

Computers and Software Buyers Guide

Compare Computers and Laptops

Mobile Phones Buyers Guide

Compare Mobile Phones