The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.

Brazil’s upgrade prompts scepticism

A commodity boom masks fundamental problems in the Brazilian economy, observers argue.

Sooner than expected, and in the wake of Peru’s sovereign rating upgrade, Brazil finally got what it wanted last month – investment-grade status. Persistent lobbying by the government and perpetual optimism from the bankers seems to have had the appropriate effect. But not long after corks were popped to celebrate, the champagne had begun to go flat. Sceptics doubt whether this new status has been earned.

The top issues on Brazil’s economic agenda are tax reform, currency appreciation and inflation. Energy shortages and access to credit are next on the list. As foreign direct investment continues to flow in at record levels, and the dollar continues to weaken, so the real continues to appreciate. By mid-May, following Brazil’s upgrade, the real had reached a new high against the dollar of R$1.64/$ – a move that clearly shows that the new 1.5% tax measures, which the president placed on all currency trades in March, in order to make the real more competitive, have been less than effective.

In terms of fiscal reform, the worried analysts are succinct – this upgrade masks the underlying tax system problems, they say. Brazilians have a tax burden that is comparable to that of the average EU taxpayer – 45% of GDP.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree