Moody’s rebukes Brazil for excluding pandemic spending from fiscal ceiling

Moody's evaluates that if there are recurring exceptions, with expenses higher than estimated, questions may arise about the country's fiscal credibility.

RIO DE JANEIRO, BRAZIL - Rating agency Moody's has assessed that the exclusion from the spending cap of additional government spending, such as that linked to Covid-19, is negative for Brazil's credit rating profile, which is at Ba2, with a stable outlook.

However, Moody's vice-president and senior analyst, Samar Maziad, said in the report that "if recurring exceptions are created to accommodate spending above the ceiling", the "credibility" of this instrument will be "questioned". This will have "negative implications for the cost and dynamics of public debt" in Brazil, it added.

The rating agency referred to . . .

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