MOSCOW (Sputnik) – Standard & Poor’s (S&P) ratings agency has cut Brazil’s long-term foreign-currency credit rating to BB+ with a negative outlook amid the country’s budget balancing struggles.
"The political challenges Brazil faces have continued to mount, weighing on the government’s ability and willingness to submit a 2016 budget to Congress consistent with the significant policy correction signaled during the first part of President Dilma Rousseff’s second term," S&P said in a Wednesday statement.
The agency lowered Brazil’s sovereign debt rating by one notch to the BB+ junk-grade mark earlier in the day.
"The negative outlook reflects what we believe is a greater than one-in-three likelihood of a further downgrade due to a further deterioration of Brazil’s fiscal position," S&P explained
Brazilian President Dilma Rousseff has announced an austerity program, which stipulates spending cuts and tax hikes, in an effort to improve the country’s fiscal situation.
Brazil is rated as investment grade by both Fitch Ratings and Moody’s. S&P first classified the country as investment grade in April 2008. The Wednesday drop to a junk status puts Brazil at the same rating level as Russia, which was given a BB+ long-term foreign currency rating by S&P in April.