Moody’s Cuts Brazil Outlook, Delivering Fiscal Warning to Lula

Moody’s Ratings lowered Brazil’s credit outlook to stable from positive, delivering a reproof to President Luiz Inacio Lula da Silva’s government at a time when it is under increasing pressure to shore up the country’s fiscal situation.

The ratings firm, which upgraded the country in October, reaffirmed its Ba1 rating, one level below investment grade. But it cited expectations of larger fiscal deficits, slower progress in structural reforms and budget pressure from high interest rates to alter its overall outlook for Latin America’s largest economy on Friday.