Moody's improves outlook on Brazil to stable

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Thursday, March 16, 2017

Moody's changed its outlook on Brazil to stable from negative.

The ratings agency left the country's senior unsecured issuer rating at Ba2 and shelf ratings at (P) Ba2.

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Moody's said that the stabilization of Brazil's economy and the drop in inflation have helped contain the growth of public debt. It also noted that there are indications that the functionality of the country's economic policy framework is improving the conditions for it to adopt structural reforms.

The third reason for Brazil's improved outlook is the significant reduction in "risk of contingent liabilities from government-related entities," the agency said.

The federal government used the improved outlook as an opportunity to reiterate the importance of the fiscal reforms it is currently trying to pass, including the controversial pension reform that drew hundreds of thousands onto the streets to protest on Wednesday.

"The revaluation by Moody's is an important recognition of recent fiscal recovery efforts and highlights the benefits to be achieved with the implementation of reforms," the government said in a release.

"The federal government reaffirms its commitment to economic recovery, marked by the effort to approve structural reforms, with the objective of guaranteeing the sustainability of public accounts, as well as contributing to the improvement of the business environment and increased productivity."