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SAO PAULO (AP) — Standard & Poor's Ratings Services said on Tuesday it has revised the outlook for Brazil's foreign-currency debt from stable to negative.
The ratings agency said in an emailed statement that it has kept Brazil's BBB- long-term foreign-currency sovereign credit rating and the country's BBB+ long-term local-currency sovereign credit rating
However, the ratings outlook was lowered to negative because of political and economic risks facing the country and the possible impeachment proceedings against President Dilma Rousseff.
"We believe Brazil's downside risks have risen. We revised the outlook to negative because despite the broad-based policy changes now under way, execution risks have risen. In our view, these risks stem from both the political and economic fronts," the agency said.
It added that it revised its outlook to negative to reflect "a greater than one-in-three likelihood" that policy corrections will face "slippage."
The agency said it expects Brazil's gross domestic product to contract 2 percent this year "followed by no growth in 2016 and modest growth in 2017."
"The number of investigations of corruption among certain politicians and companies is increasingly weighing on Brazil's fiscal and economic outlook, putting at risk effective policy implementation, particularly in Congress," the statement said.
Brazil's state-owned oil company, Petrobras is currently engulfed in a corruption-kickback scandal that prosecutors have said involved at least $800 million in bribes and other illegal funds. Some of that money was allegedly funneled back to the ruling Workers' Party and its allies' campaign coffers. The scheme also allegedly included the payment of bribes to Petrobras executives in return for inflated contracts.
The chief executive officers of some of Brazil's top construction companies have been charged with money laundering, corruption, racketeering cartel formation and diversion of public funds.
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