The ratings on the Federative Republic of Brazil are constrained by: A large general government debt burden with significant vulnerability to interest- and exchange-rate movements. Net general government debt is projected at 62% of GDP in 2003, assuming a year-end exchange rate of Brazilian real (BrR) to U.S. dollar (US$) of BrR3.2 to US$1. Interest payments on the debt remain very high, at around 23% of general government revenue. Significant external vulnerability. Despite some improvement, Brazil's gross external financing needs (current account deficit, medium- and long-term amortizations, and short-term debt) are projected to average 141% of reserves in 2003-2004, much higher than that of the 'B' median. External debt net of liquid assets is projected to average 214% of current
