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Brazil

S&P's downgrading of Brazil's debt rating draws domestic criticism

Standard & Poor's downgrading of Brazil's debt rating hasn't gone down well with policy makers and economic pundits there. They felt the ratings agency's decision was unfounded and didn't reflect recent developments.

Brazil's Finance Minister, Guido Mantega criticized Standard & Poor's decision to downgrade the country's debt rating to just one notch above junk status, changing its assessment from BBB to BBB-.

Mantega said the move by the US ratings agency did in no way reflect Brazil's robust economy, with gross domestic product rising by another 2.3 percent last year and with it marking stronger growth than that recorded in most of the G20 nations.

He also pointed out that a primary budget surplus in 2013 had enabled the government to reduce the nation's gross public deficit to 57.2 percent of GDP, down from 58.8 percent a year earlier.

Resourceful accounting?

Brazil returns to growth

Brazil's central bank was equally critical of S&P's decision, arguing the country had found very robust answers to the most recent global economic challenges and was willing to continue along this path.

By moving Brazil's debt rating closer to speculative territory, Standard & Poor's had dealt a blow to President Dilma Rousseff who was seeking a second term in elections in October. It was expected to expose her left-leaning government to further accusations that it had squandered the goodwill built during a long economic boom over the past decade.

Rousseff has been trying to revive the economy with tax cuts and social spending, but has been widely criticized for intervening too much and resorting to sometimes opaque accounting to meet budget targets.

hg/hc (dpa, Reuters)

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