BRASILIA, May 16 (Reuters) - Credit rating agency Moody’s decision to maintain its “Ba2” rating on Brazil’s sovereign debt and “stable” outlook is a vote of confidence in the country’s long-term fiscal stability, Privatization Secretary Salim Mattar said on Saturday.
The affirmation from Moody’s on Friday comes as the Brazilian government’s deficit and debt are set to blow out to record levels due to the coronavirus crisis, and follows recent outlook downgrades from Fitch and S&P.
“In a demonstration of confidence in Brazil, credit rating agency Moody’s has affirmed Brazil’s sovereign rating,” Mattar tweeted on Saturday.
“(Economy) Minister Guedes is committed to continuing reforms and fiscal adjustments to maintain confidence in the country. After the pandemic, we will fix the (public) accounts,” he said.
The main reasons Moody’s is looking through the sudden surge in indebtedness are record low interest rates making it easier to service the debt, post-crisis fiscal consolidation, limited exposure to external debt, and strong foreign currency reserves.
Treasury Secretary Mansueto Almeida said last week that the government’s record primary budget deficit this year could exceed 9% of gross domestic product, while debt could rise past 90% of GDP.
The economy is expected to shrink at its fastest pace this year since records began over a century ago, according to the government and a growing number of economists. On top of that, the country’s political and health crises are intensifying.
Brazil’s “Ba2” credit rating from Moody’s is two notches below investment grade. (Reporting by Jamie McGeever; editing by Diane Craft)