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16 Sep 2015
Brazil: On path of fiscal consolidation – Rabobank
FXStreet (Delhi) – Research Team at Rabobank, note that after the Brazil’s recent downgrade to junk category by S&P, the country is slowing progressing ahead on the path of fiscal consolidation with the announcement of some tough austerity measures.
Key Quotes
“On September 9th, Brazil was downgraded to BB+ with a ‘negative’ outlook by Standard & Poor’s thus Brazil lost its investment grade status and is now considered ‘junk’ by the ratings agency.”
“The trigger for the downgrade was likely the budget proposal announced on August 31st which included a BRL 30.5bn deficit (0.5% of GDP). This effectively meant that Brazil would face three consecutive years of budget deficits.”
“Yesterday, Fin Min Levy and Planning Min Barbosa announced a BRL 66.2bn plan aimed at returning Brazil to a primary surplus with a central government primary balance target of BRL 34.4bn. We remain skeptical as to whether this is achievable given slowing growth and high implementation risk.”
Key Quotes
“On September 9th, Brazil was downgraded to BB+ with a ‘negative’ outlook by Standard & Poor’s thus Brazil lost its investment grade status and is now considered ‘junk’ by the ratings agency.”
“The trigger for the downgrade was likely the budget proposal announced on August 31st which included a BRL 30.5bn deficit (0.5% of GDP). This effectively meant that Brazil would face three consecutive years of budget deficits.”
“Yesterday, Fin Min Levy and Planning Min Barbosa announced a BRL 66.2bn plan aimed at returning Brazil to a primary surplus with a central government primary balance target of BRL 34.4bn. We remain skeptical as to whether this is achievable given slowing growth and high implementation risk.”