The ratings on the Federative Republic of Brazil reflect a consistent macroeconomic framework that includes a floating exchange rate regime and inflation and fiscal consolidation strategies. This policy framework has strengthened progressively since 1999, as has Brazil's institutional environment. The smooth political transition of 2002-2003 highlights the maturing of Brazil's democracy. A culture of fiscal responsibility that extends beyond the executive branch of government to congressional and local government officials and across party lines continues to develop. Brazil's ratings, however, remain constrained by a large general government debt burden that continues to be vulnerable to interest- and exchange-rate movements. Net general government debt is projected at about 60% of GDP in 2004-2005, and interest payments on the debt, while declining,
