Governance in Brazil will become more challenging
Thursday, September 17, 2015
Significance
When credit rating agency Standard & Poor's downgraded Brazil's foreign currency debt to 'junk' status on September 9, it cited "political challenges" "weighing on the government's ability and willingness to submit a 2016 budget to Congress" consistent with its objective of rebalancing its books. This exemplifies Brazil's serious governance problems, which affect different areas of policy-making.
Impacts
- Spending cuts will further undermine Rousseff's congressional support.
- A new right is emerging with a traditional liberal agenda.
- The political reform under discussion does not address key governance issues.