The ratings on the Federative Republic of Brazil are constrained by: A large general government debt burden that, despite ongoing improvement, continues to be vulnerable to interest- and exchange-rate movements. Net general government debt is projected at about 64% of GDP in 2004, and interest payments on the debt, while declining, are still high at almost 20% of general government revenue. The magnitude of the debt burden and extent of spending rigidities both imply that there is limited room for countercyclical fiscal policy. External vulnerability. At a projected average 120% in 2004-2005, Brazil's gross external financing needs (current account deficit, medium- and long-term amortizations, and short-term debt) are historically low in terms of reserves, although just nearing the 'B' median's
