Brazil has lost its investment-grade credit rating following a downgrade by Standard & Poor’s to “junk” status, according to BBC News.
The U.S. rating agency said mounting political turmoil and the difficulties faced by President Dilma Rousseff‘s government in tackling growing debt was behind the decision.
Will you offer us a hand? Every gift, regardless of size, fuels our future.
Your critical contribution enables us to maintain our independence from shareholders or wealthy owners, allowing us to keep up reporting without bias. It means we can continue to make Jewish Business News available to everyone.
You can support us for as little as $1 via PayPal at [email protected].
Thank you.
Brazil was awarded an investment-grade rating by S&P in April 2008, when the country’s economy was on the rise. However, sliding commodity prices and austerity have created a recession.
Rousseff’s left-wing government had imposed austerity measures in a bid to avoid such a downgrade. S&P downgraded Brazil – Latin America’s largest economy – sooner than had been expected.
The move – a major setback for Finance Minister Joaquim Levy’s attempts to shore up public finances – is likely to rock the Brazilian stock market on Thursday, September 10. S&P cut Brazil’s rating from BBB-minus to BB-plus, which denotes substantial credit risk.
The outlook on the new rating remains negative, which means further downgrades could soon follow.
