Brasília – Brazil has responded to the challenges at an international level in a classical and sturdy way, said the Central Bank (BC), in reply to the lowering of Brazil’s ratings by the credit ratings agency Standard and Poor’s (S&P).
“In spite of the evaluation by the credit ratings agency Standard & Poor’s, which re-evaluated the country’s credit rating, Brazil has responded and will continue rising up to the challenges presented in the international scenario in a classical and sturdy way,” says the BC, in a note.
The BC adds that “this response combines austerity in conducting macroeconomic policies, flexible exchange flow and the use of protection reserves accumulated though the years (liquidity reserves) to soften the asset price movements”. Thus, proceeds the BC, Brazil is well positioned in this new stage of standardisation of the global financial conditions and is fully capable of overcoming it in safety.
“As a matter of fact, the country is receiving capital flows in the last months which reflect the current policies. The quality of the current policies should keep the country well prepared for this new international scenario which is taking shape”, it concludes.
In a report released late afternoon on this Monday (24), the agency reduced the country’s grade from BBB to BBB- with a neutral perspective, which shows that the classification will not be lowered in the next months. The agency has informed that the Brazilian government’s general debt – an indicator used in international comparisons – is high and that the Gross Domestic Product (GDP) is low, probably amounting to 1.8% in 2014 and 2% in 2015. According to the S&P, the government gives mixed signals in relation to spending in an election year and that there is little confidence in business. Furthermore, the higher indebtedness of the population should make consumption grow less.
*Translated by Rodrigo Mendonça
