The considerable fiscal and economic challenges in Brazil imply the need for a steadfast policy commitment. Despite progress on a medium-term fiscal correction under the Temer Administration, lingering political uncertainties, heightened fiscal pressures from local governments, and a weak economy imply a slow, prolonged adjustment. We expect the economy to post low growth over the next several years, after a significant drop in real GDP since 2014, the general government deficit to average over 7% during 2017-2019, and net general government debt to rise toward 67% of GDP by 2019. We are affirming our long-term foreign and local currency sovereign credit ratings at 'BB', and our short-term foreign and local currency sovereign credit ratings at 'B'. The negative outlook reflects
