Fitch upgrades Brazil credit rating to BB-
Fitch Ratings on Tuesday upgraded Brazil's long-term foreign and local currency credit ratings to "BB-" from "B+," citing sound macroeconomic policies and declining debt burdens.
It affirmed the short-term rating at 'B'. The rating outlook is stable, Fitch said.The action reflects a marked turnaround in international trade performance, declining public and external debt burdens, and a demonstrated commitment to sound macroeconomic policies, the agency said in a statement.
"The 25 basis point hike in the Selic policy rate earlier this month and the fact that the authorities chose not to ramp up spending ahead of Sunday's municipal elections, even in light of strong tax performance so far this year, are further signals of the determination to run sound macro policies in Brazil," said Roger Scher, managing director of Latin American sovereigns at Fitch Ratings.
Brazil's external financing needs, which Fitch forecasts at nearly $33 billion next year, essentially unchanged from 2004, remain heavy due to the legacy of past borrowing.
Nevertheless, current account surpluses, equity inflows and strong export growth have yielded a declining net external debt burden, forecast at under 140 percent of broad exports this year, down from a high of 308 percent in 1999, Fitch said.
Although this ratio still compares unfavorably with the "B" category median, forecast at 92 percent this year, it is projected to fall below 100 percent in two years time.
The fiscal authorities continue to outperform their targets, with the public sector primary surplus totaling 4.95 percent of gross domestic product in the 12 months to August.
(From Reuters, September 28, 2004)
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