Standard&Poor's Ratings Services' ratings on the Federative Republic of Brazil are based on the country's strengthening prospects for steady, long-term GDP growth as well as modest current account and fiscal deficits that should gradually reduce the country's vulnerability to external shocks. Brazil's diverse economic structure, its expanding middle class, and the potential for higher exports should sustain both GDP growth and external liquidity in the next three to five years. Political consensus in favor of cautious fiscal and monetary policies likely would contain the risk of economic dislocation that could result from potential shocks. Recent steps to contain short-term inflationary pressures demonstrate the government's commitment to containing macroeconomic risks. During the past six months, the authorities cut the
