Regions

Credit downgrade threatens Brazil- analysis

September 14
6:49 AM 2013

A Reuters analysis revealed that a credit downgrade had become a threat to Brazil. Estimates gathered by the news agency as well as that of private economists show that the government would not be able to meet its target in the primary surplus in next year's budget. The deficit could go up as much as much as BRL 50 billion or USD 22 billion.

According to Reuters, the primary surplus in the biggest economy in Latin America was a closely- watched indicator. Since Brazil's budget goal eliminated interest payments on its debt, a reduction in the primary surplus would indicate a widening deficit. The analysis said that this could be a major setback in the Brazilian economy if it occurred. It was in 2008 when Brazil won its investment grade rating by credit rating agencies.

Brazil had experienced slow growth since 2011. President Dilma Rousseff has since then responded by giving tax breaks and credit subsidies. These strategies had only made things worse for the Brazilian economy, the report said.

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