Rating agency Fitch raised Brazil’s debt risk rating from BB- to BB with a stable outlook, seven months after leftist Luiz Inacio Lula da Silva returned to the presidency.
Fitch said in a statement that the upgrade reflects better-than-expected macroeconomic and financial performance.
Brazil was downgraded from BB to BB- in 2018, when the government of President Michel Temer abandoned plans to reform a generous pension system, with cuts finally adopted by his far-right successor, Jair Bolsonaro.
Three weeks ago, Lula’s government got the go-ahead from the lower house of Congress to overhaul Brazil’s complex tax system. The project still needs Senate approval.
Fitch said that despite ongoing political tensions since the 2018 downgrade, Brazil has made progress on reforms to address its economic and financial challenges.
Fitch specifically cited tax reform and other initiatives to support the private sector in Latin America’s largest economy.
Finance Minister Lula Fernando Haddad welcomed the promotion, telling reporters, “I am very happy that in six months of work we can tell the world that Brazil is a country of opportunity.”
Brazil’s GDP growth rate in the first quarter of this year was 1.9 percent, which was higher than predicted.
