Credit rating agency Fitch has upgraded Brazil’s long-term credit rating from BB- to BB due to better-than-expected fiscal performance and policy reforms.
The GDP growth forecast for 2023 has also been revised upwards from 0.7% to 2.3%.
This is the first such adjustment since 2018, acknowledging the progress made in addressing economic challenges despite political disagreements.
Fitch expects institutional checks and a pragmatic approach to prevent major departures from Brazil’s liberal economic path.
Anticipated reforms, including a tax proposal that aims to simplify the complex system, are expected to boost competitiveness.
The agency praises the Central Bank’s recent handling of inflation and the steady Selic rate.
Fitch also anticipates a potential record trade surplus in 2023, alongside an improved debt trajectory.
Although the fiscal situation is predicted to worsen in 2023, the agency believes new fiscal rules and tax measures will allow for gradual consolidation.
Fitch suggests that the rise in the public debt-to-GDP ratio will be slower from a healthier base, and despite political tensions, no negative outcomes are foreseen due to effective checks and balances.
The Finance Ministry remains committed to ongoing reforms to improve fiscal balance and enhance credit conditions.
This upgrade has been welcomed as a notable achievement for Brazil’s economy.