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Brazil & Southern Cone - September 2015 (ISSN 1741-4431)

S&P downgrade deepens Brazil’s economic crisis

Much of the Brazilian government’s economic policy-making this year has been designed to stave off a downgrade by one of the three major credit ratings agencies. But at every turn, the austerity measures advocated by Finance Minister Joaquim Levy have been rejected or diluted by a hostile congress. Finally, on 9 September, Standard & Poor’s decided it had seen enough, and downgraded Brazil’s sovereign debt rating from BBB- to BB+; a move from the last investment grade to junk status. It appears the final straw was the 2016 budget presented to congress on 1 September, which envisaged a budget deficit of R$30.5bn in 2016.

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