UPDATE 1-Fitch wants Brazil's next government to adjust policies

jueves 10 de abril de 2014 11:53 GYT

(Adds comments from Fitch analysts, background)

By Walter Brandimarte

RIO DE JANEIRO, April 10 (Reuters) - Fitch Ratings on Thursday said it expects Brazil's next government to support the country's credit rating by making policy adjustments to improve its fiscal performance and boost investor confidence.

In a conference call with investors, Fitch analyst Shelly Shetty said low growth rates and a deterioration in fiscal accounts are the firm's main concern about Brazil, which remains rated at BBB with a stable outlook.

Her remarks suggest Fitch is willing to give the benefit of the doubt to the next Brazilian president, to be elected in October. They also may help to allay fears Brazil would soon suffer another sovereign downgrade, following Standard & Poor's decision to cut the country's rating to near junk level last month.

"We believe that the deterioration in credit fundamentals that we've seen so far in Brazil is broadly within the tolerance level of the BBB rating," Shetty said.

In coming years, however, Fitch wants to see adjustments to "attract private investment and boost confidence, which has been affected due to policy uncertainty."

Without improving the rate of investment, it will be "very hard" for Brazil to grow at a pace of around 4 percent a year, Shetty said.

The Brazilian economy has been unable to grow above 3 percent since President Dilma Rousseff took office in 2011. This year, it is forecast to expand less than 2 percent even as Brazil hosts the World Cup, which Fitch believes will have "insignificant" impact on activity.   Continuación...