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LatinNews Regional Monitor: Brazil & Southern Cone - 8 February 2019

In brief: Brazil

* Standard & Poor’s (S&P), the international credit ratings agency, has affirmed its ‘BB-’ long-term foreign and local currency sovereign credit ratings of Brazil with a ‘stable’ outlook. S&P cut its Brazil rating from ‘BB’ to ‘BB-’ in January 2018 over the uncertainty surrounding the October 2018 general election and the resulting new government’s ability to push through economic reforms, including pension reform. However, in a note confirming Brazil’s current rating, S&P says that it answers to “our view that the [President Jair] Bolsonaro administration will advance policies, with support from congress, to slowly improve the fiscal deficits…We also expect moderate acceleration of economic growth on improved investor confidence…” The note adds: “We could rise the ratings over the next two years if the breadth and depth of policy advances suggests a more rapid turnaround in Brazil’s fiscal and growth trajectories that we currently expect”.