Credit rating agency Moody’s said Brazil’s fiscal reform should continue its momentum, despite evolving “political dynamics.”
Moody’s labeled Bolsonaro’s latest fiscal reform moves as “credit positive,” despite recognizing reform initiatives are “complex,” due to what they can achieve and the legal process required for approval.
“A narrow time frame to approve the reforms before campaigning for local elections begins in mid-2020 also poses a challenge,” the credit rating agency noted. “Proposed fiscal reforms seek to increase fiscal flexibility and set the debt level as a fiscal policy anchor.”
According to Moody’s, an effective tax reform would improve the business environment in the medium-term.