AFP, Rio De Janeiro :
Fitch agency cut Brazil’s sovereign debt rating again Friday, sending it deeper into junk status after the government gave up on attempts to get approval for pension reforms.
The long-term foreign currency issuer default rating was cut below investment grade, from BB to BB-.
“Brazil’s downgrade reflects its persistent and large fiscal deficits, a high and growing government debt burden and the failure to legislate reforms that would improve the structural performance of public finances,” Fitch said in a statement.
The rating outlook was revised from negative to stable.
President Michel Temer’s government has conceded it cannot get enough support in Congress to pass cuts to the generous pension system before elections take place in October.
Brazil’s ministers have repeatedly described the cuts as necessary to restoring the country’s fiscal health after a hard two-year recession.
“The October presidential and congressional elections mean that the social security reform will be delayed until after the elections and there is uncertainty whether the next administration will be able to secure its approval in a timely manner,” Fitch said.
In January, the S&P ratings agency also cut Brazil’s score from BB to BB-.
The third big agency, Moody’s, has given Brazil a Ba2.
Temer is deeply unpopular and there has been widespread resistence to the proposed pension cuts. However, his policies are backed by investors and under his presidency Brazil has slowly returned to growth.
Fitch agency cut Brazil’s sovereign debt rating again Friday, sending it deeper into junk status after the government gave up on attempts to get approval for pension reforms.
The long-term foreign currency issuer default rating was cut below investment grade, from BB to BB-.
“Brazil’s downgrade reflects its persistent and large fiscal deficits, a high and growing government debt burden and the failure to legislate reforms that would improve the structural performance of public finances,” Fitch said in a statement.
The rating outlook was revised from negative to stable.
President Michel Temer’s government has conceded it cannot get enough support in Congress to pass cuts to the generous pension system before elections take place in October.
Brazil’s ministers have repeatedly described the cuts as necessary to restoring the country’s fiscal health after a hard two-year recession.
“The October presidential and congressional elections mean that the social security reform will be delayed until after the elections and there is uncertainty whether the next administration will be able to secure its approval in a timely manner,” Fitch said.
In January, the S&P ratings agency also cut Brazil’s score from BB to BB-.
The third big agency, Moody’s, has given Brazil a Ba2.
Temer is deeply unpopular and there has been widespread resistence to the proposed pension cuts. However, his policies are backed by investors and under his presidency Brazil has slowly returned to growth.
