Goldman Sachs, the US-based investment bank, issued criticism on Thursday, 15, toward the report by rating agency S&P that upgraded the outlook for the Brazilian government’s rating from stable to positive.
The bank regarded the move by S&P as unexpected, particularly due to what they perceive as a declining economic and political landscape in Brazil.
Goldman Sachs underlined the lack of approval for the new fiscal framework and pointed to a visible “decline in microeconomic policies and regulatory environment” that have occurred in recent months.
Finance Minister Fernando Haddad, on the other hand, welcomed the decision by S&P.
He declared that there is “no doubt” that Brazil will reclaim its investment grade status, which gives investors more confidence.
Despite Haddad’s optimism, Goldman Sachs maintained that the recovery of investment grade status necessitates “resolute reforms and policies at macro, micro, and regulatory levels that stimulate investment, encourage productivity growth (i.e., elevate the currently modest potential real GDP growth) and stabilize debt dynamics.”
“From our standpoint, except for monetary policy, the existing macro and micro policy blend and the reform outlook still fall notably short of this criterion,” remarked Alberto Ramos, Latin American economic analysis head at Goldman Sachs.
The bank’s report reserved its sole commendation for the Brazilian monetary policy executed by the Central Bank of Brazil.
Goldman Sachs emphasized, “Apart from monetary policy, the existing macro and micro policy blend and the reform outlook are still considerably below this standard.”