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Fitch says Brazil's slipping budget target shows fiscal trouble
September 1, 2015 / 2:43 PM / 2 years ago

Fitch says Brazil's slipping budget target shows fiscal trouble

SAO PAULO, Sept 1 (Reuters) - The Brazilian government’s first-ever budget bill with a primary deficit underscores the growing risks to its public finances, a Fitch Ratings analyst said on Tuesday, adding to concerns that the country could lose its investment-grade credit rating.

President Dilma Rousseff on Monday proposed a 2016 budget bill that forecast a 0.34 percent deficit before interest payments, down from a forecast for a 0.7 percent primary surplus earlier this year.

“These downward revisions put the trend of primary surpluses well below Fitch’s baseline scenario used in April and highlight the growing risks to the trajectory of public finances and debt,” said analyst Shelly Shetty in an emailed statement.

In April, Fitch warned it may cut Brazil’s credit rating in the next couple of years if the economy deteriorates further, revising the outlook on Brazil’s BBB credit rating to negative from stable.

Brazil’s benchmark Bovespa stock index slid 2.3 percent on Tuesday and its currency slipped 1.3 percent flirting with a 12-year low. (Reporting by Patricia Duarte; Additional reporting by Daniel Bases in New York; Writing by Brad Haynes; Editing by Marguerita Choy)

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