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Investor confidence in President Jair Bolsonaro's ability to reverse the fiscal crisis in the country is such that two out of three fund managers filing a claim in Latin America believe that Brazil still has the seal of the good payer in this government.
This emerges from a Bank of America survey of 34 institutional investors and bank clients, which has total badets under management of $ 93 billion. The survey was conducted between January 4th and 9th.
When asked whether Brazil would return to the level of investment granted by risk badessment agencies, 85% of those surveyed responded in the affirmative.
When? Two in three said it during the administration of Bolsonaro. 18% think this will be the case in 2023. Only 6% said the seal would not come in the near future.
The collapse of the confidence of risk management agencies in Brazil's fiscal situation began in September 2015, when S & P withdrew the country's good-paying seal. In December of the same year, Fitch degraded the Brazilian ticket. In February 2016, it was Moody's turn.
Today, the country is about to resume its engagements at Moody's (Ba2). At Fitch (BB-) and at S & P (BB-), it is at three levels. In all three cases, the outlook is stable, indicating little chance of change. Before lifting the notes, the agencies tend to improve the outlook, but it is not uncommon for this to happen with a stable outlook.
Much of the optimism of the leaders lies in the approval of the pension reform, a measure deemed essential by the market. to make financial viability in Brazil. For 91% of people consulted by the bank, the changes will be approved this year – 32% estimate that the first six months of the year.
The Oxford Economics Analysis Team is among those who feel that things are already improving this year. Brazil, which seems to enjoy a honeymoon with investors in 2019, is nominated as a candidate for a positive rating action.
Brazil, which seems to benefit from a honeymoon with investors in 2019, this year after an impressive external adjustment and deleveraging of the private sector in 2015-2018, "writes economist James Watson in a report by Marcos Casarin, Chief Economist for Latin America, and Evghenia Sleptsova, Senior Market Economist, Emerging Markets.
According to them, despite the weight of its high domestic indebtedness, Brazil has succeeded to contain external imbalances
Oxford Economics however warns that for the action to materialize, Bolsonaro can not deliver less than promised in "
" If the new Brazilian government can take a more decisive approach in budgetary discipline, how to approve it. "
The government still has to convince the market that it will act to reduce Brazil's budget deficit. this year's reform, we will see positive ratings actions in the biggest economy of Latin America in 2019. "
For Tony Volpon, chief economist at UBS, an optimistic forecast would not include a recovery in the level of investment in Brazil for at least the next five years
"I do not see that happening before the level of gross debt has stabilized for a few years," he said.
According to the projections of the UBS team, Brazil's gross debt compared to GDP, now 77, according to the Central Bank, 3% should continue to grow until 2023, when it begins to decline gradually.
With the spending ceiling – rule that prevents the increase in public spending above inflation – in "
" It is not politically feasible to think, considering the twenty years of e ceiling, that we would have a primary surplus of 5% of GDP when it would reach a certain level, the ceiling should be relaxed, but even baduming this vegetative increase in the primary surplus, we would not go back to 60% of GDP by 2030. "
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