(MENAFN- AFP) International credit rating agency Standard and Poors said Wednesday that it has decided not to downgrade Brazil's sovereign ratings for the time being, but may well do so next year if Latin America's biggest economy does not sufficiently tackle its debt.
S&P Global Ratings said in a statement it had removed Brazil from its CreditWatch list, "where we had placed them with negative implications on May 22, 2017".
Brazil's long-term sovereign debt is currently rated "BB", which is non-investment grade or "junk", but S&P had placed it on a list for possible downgrade after president Michel Temer was nearly ousted in a corruption scandal.
Since then, however, "the political landscape is somewhat more settled as President Temer survived a vote -- by the Federal Electoral Court (TSE) in June and by Congress in August -- related to corruption charges," the rating agency said.
"Meanwhile, the economy appears to have stabilized despite fluid politics, Congress passed a labour reform in July, and the government remains committed to advancing some pension reform," it continued.
Nevertheless, S&P said it would keep the "negative" outlook on Brazil's ratings.
That "reflects ongoing political challenges and the risk of a downgrade over the next six to nine months -- given Brazil's high and rising debt burden -- should Congress fail to advance legislation that begins to reduce Brazil's fiscal rigidities, which hinder deficit reduction and sustained moderation in spending growth," it argued.
Brazil's finance minister, Henrique Meirelles, said Tuesday that the government was raising its deficit ceiling for this year and 2018 because of a big drop in tax revenue, sluggish growth and other woes in Latin America's biggest economy.
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