The government continues to implement fiscal consolidation measures aimed at reducing Brazil's still large fiscal deficit. This, along with lower interest rates and gradual implementation of the reform agenda, should contribute to somewhat stronger growth and investment prospects over the next three years, as well as a gradual improvement in fiscal outcomes. We are revising our outlook on Brazil to positive from stable and affirming our 'BB-' long-term and 'B' short-term sovereign credit ratings. The positive outlook reflects prospects for an upgrade in the next two years if further progress--be it prioritization, passage, or execution--on the government's broad fiscal and growth agenda allows for a more rapid reduction in Brazil's fiscal deficits and a stabilization of debt dynamics. On Dec.
