...The ratings on Republic of Brazil are based on our expectations that, despite the challenging political and economic scenario facing the country, the policy correction underway will garner sufficient support from the public and private sectors to improve Brazil's economic and fiscal stance over the next several years. When we downgraded Brazil in 2014, we expected that weaker growth and fiscal trajectories would lessen the government's room for maneuver in the face of economic shocks. The ratings also incorporated the expectation that a second Rousseff Administration will continue its track record of mixed, inconsistent policymaking. Brazil's economic growth prospects and fiscal debt burden weakened further by the end of last year. This reflects larger-than-expected fiscal slippage in 2014 that will take time to reverse during a period of economic contraction, owing in part to the knock-on effects of investigations of corruption allegations at Petrobras, a state-owned energy company. However,...
