This report does not constitute a rating action. Overview Institutional and economic profile Flexibility and performance profile --Pragmatic policy implementation anchored by evolving checks and balances. --Strong external position, characterized by small current account deficit and low external debt. --That said, we expect slow and uneven progress at addressing expenditure rigidities to achieve long-term fiscal sustainability. --Brazil?s fiscal position is expected to be weak due to persistent primary deficits, a large interest burden, and high fiscal debt levels. --Resilient economy but growing below emerging market peers. --Restrictive monetary policy expected over the next 24 months. Moreover, deep domestic capital and debt markets mitigate the sovereign's funding risk and allow the government to maintain a favorable composition of debt, mostly denominated
