Brazil’s attempts at reform point the way out of junk status for SA
Policies aim to strengthen fiscal accounts, macroeconomic stability, competitiveness and productivity
SA lost its final investment grade rating (from Moody’s Investors Service) on March 27 after years of fiscal largesse by the government and low growth compounded by the impact of Covid-19. Brazil lost its final investment grade rating — also from Moody’s — on February 24 2016.
Brazil’s downgrade journey looks remarkably similar to that of SA. Before the downgrade both countries suffered from extensive corruption, a lack of structural reform, high unemployment and high fiscal deficits. Upon closer inspection of some of the key economic indicators for the five years leading to the loss of their final investment grade ratings, it is clear that the countries followed a similar path...
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