Fitch lowered the rating for the second time BrazilRating agency Fitch Ratings lowered the sovereign credit rating of Brazil for the second time this year, citing ballooning budget deficit, political turmoil and a deeper than expected recession. The agency put the country's debt status "junk", another blow to President Dilma Rousseff, who is trying to revive the economy and to avoid impeachment, reported Wall Street Journal.
Lowering the assessment remains Brazil rated BB +, one level in the category of "junk", with a negative outlook.
Fitch is the second of the three major rating agencies after Standard & Poor's, which reduces Brazil's debt to "junk", as this could lead to a sell Brazilian stocks and the currency weakened. This will increase the cost of borrowing and by the Brazilian government at a time in which Treasury Secretary Joaquim Levy tries to reduce the state budget deficit.
"The deteriorating local environment increases the challenges for the authorities in taking timely corrective policy actions to support confidence and improve the prospects for growth, fiscal consolidation and stabilization of debt," says Fitch.
The deficit is inflated this year to 9.5 percent of GDP in the 12 months to October, while the shrinking economy has reduced tax revenues. The political deadlock in Congress does stop the vast bulk of the savings program of Levi.
The recession in the country, which according to economists is the worst since the Great Depression, and the huge corruption scandal in state oil company Petrobras downloaded approval rating of the government Rousseff to single-digit rates and further enhance its calls for impeachment.