A consistent macroeconomic framework and fiscal consolidation strategy. A strengthened institutional environment, including the smooth political transition to a PT government in 2002-2003. A significant portion of government debt issued domestically, in local currency, and held by residents. A large general government debt burden (60% of GDP) that is vulnerable to interest- and exchange-rate movements. A vulnerable external position given a high stock of external debt and export base of only 18% of GDP. Structural economic and institutional weaknesses, which limit investment and growth. The ratings on the Federative Republic of Brazil reflect a consistent macroeconomic framework that includes a floating exchange rate regime and inflation and fiscal consolidation strategies. This policy framework has strengthened progressively since 1999, as has
