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Fitch downgraded the credit rating of Brazil

International rating agency Fitch downgraded the credit rating of Brazil in national and foreign currency to a level from BB+ to BB with a negative outlook. This means that the assessment of the agency may be reduced again in the coming months. The agency predicted that the economy will shrink by 3.8% this year due to the high level of political uncertainty, deteriorating labor market and the slowdown of the leading trading partner – China.

“Downgrade of Brazil credit rating reflects the stronger than expected economic downturn in the country, the government’s inability to stabilize the outlook for the public finances, as well as the increased level of political uncertainty”, said the statement of Fitch.

Currently, Brazilian President Dilma Rousseff is in procedure of impeachment over corruption scandals in the oil giant Petrobras. If it comes to impeachment, the presidency would most likely be taken by her deputy at the time Arlindo Chinaglia. The Finance Minister most likely will become Henrique Meireles, who will have to establish realistic targets for development of the country.

Meanwhile, the Supreme Federal Court of Brazil suspend the powers of the chairman of the lower house of the National Congress Eduardo Cunha for an alleged attempt to intimidate congressmen and obstruction of investigations against him. Brazilian Constitution provides that as chairman of the lower house Cunha is the third line as a possible successor Rousseff if impeachment procedure against her succeed.

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