This report does not constitute a rating action. Overview Credit context and assumptions Base-case expectations Substantial albeit declining oil royalties, alongside strengthening tax collection support consistent operating surpluses. We expect continued track record of prudent fiscal policy and long-term planning. High liquidity and a low debt burden provide additional resiliency to diminishing royalties. Higher diversification of the local economy could mitigate the effects from diminishing royalties. A rigid framework for Brazilian local and regional governments restricts flexibility. Capital expenditure will likely remain elevated and financed by a mix of cashflow, liquidity and borrowings. Niterói's stand-alone credit profile (SACP) of'bb+'indicates the city's solid fiscal and economic profiles, which reflect a track record of prudent policy execution. A decade of
