Brazil is no longer among “the five most fragile” countries when it comes to balance-of-payments risk, a top Standard and Poor’s executive said Monday. S&P’s Global Sovereign Ratings Director Moritz Kraemer made the statement at a Getúlio Vargas Foundation seminar. He said Brazil has gained protection from balance-of-payments risk in recent years via creation of hefty foreign reserves and robust exports. Brazil is headed for a record foreign trade surplus this year. However, Kraemer added, “Risk to Brazil’s sovereign credit rating comes from the domestic side, not the overseas side.” He said the biggest risk for Brazil currently is the country’s burgeoning national debt, which now tops 70% of GDP. S&P rates Brazil as Double-B but with a negative outlook. Double-B B is two notches below investment grade. Kraemer said passage of a pension reform bill was necessary in order to help fix Brazil’s fiscal problem. However, he added that one reform may not be enough to prevent the continued rise of the national debt.
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