OVERVIEW The political challenges Brazil faces have continued to mount, weighing on the government's ability and willingness to submit a 2016 budget to Congress consistent with the significant policy correction signaled during the first part of President Dilma Rousseff's second term. The government's 2016 budget proposal envisions yet another change to the primary fiscal target less than six weeks after the previous downward revision, which would mean three consecutive years of a primary deficit and net general debt continuing to rise if subsequent revenue or expenditure measures are not taken. We are lowering the long-term foreign and local currency sovereign ratings on Brazil to 'BB+' and 'BBB-', respectively. The negative outlook reflects what we believe is a greater than one–in–three
