The rating agency Moody’s pointed out this Monday (31) that the victory of Luiz Inácio Lula da Silva (PT) by a narrow margin in the second round of the presidential election limits its ability to implement radical changes in public policies.
For the senior analyst at Moody’s Investors Service, Samar Maziad, Lula will have a weaker term at the beginning of his government after securing his third term in the presidency.
“At this time, we do not expect a major withdrawal from the government’s fiscal consolidation efforts and we see a low risk of reversal of already passed reforms,” she said in a note.
Lula said several times during the campaign that he intends to revoke the spending cap, the country’s main fiscal anchor, and his campaign has not yet detailed what instrument would replace the current rule.
Moody’s baseline scenario predicts that the economic liberalization agenda is likely to stall and also predicts greater interventionism.
“A smooth transition of power would be consistent with our assessment of institutional strength and the stable outlook currently assigned to Brazil’s Ba2 government debt rating,” added Maziad.
Source: CNN Brasil
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