The ratings on the Federative Republic of Brazil reflect a consistent macroeconomic framework that includes a floating exchange-rate regime as well as inflation and fiscal consolidation strategies. This policy framework has bolstered the sovereign's fiscal performance. Higher primary (noninterest) balances have supported a decline in the overall general government deficit to the 3.5% of GDP range. The central bank has successfully engineered a monetary tightening cycle (absent an economic crisis) that reduced actual and expected inflation. On balance, a culture of fiscal responsibility extends beyond the executive branch of government and across parties. The smooth political transition of 2002-2003 highlights progress in policy continuity across party lines in Brazil. The 2005 political crisis that weakened the governing coalition has not
