S&P to meet high-ranking Brazil officials to analyze policies

BRASILIA, March 7 Fri Mar 7, 2014 6:10pm EST

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BRASILIA, March 7 (Reuters) - Standard & Poor's sovereign ratings director Lisa Schineller will meet high-ranking Brazilian government officials next week to evaluate the country's macroeconomic policies, government sources told Reuters on Friday.

The meetings, which include visits with Finance Minister Guido Mantega and central bank chief Alexandre Tombini, come as Brazil works to allay concerns among S&P and other ratings agencies that its public finances have taken a turn for the worse in recent years.

S&P last year placed a negative outlook on its rating for Brazil, raising fears among investors, local business people and Brazilian officials that it and other ratings agencies could downgrade the country's ratings.

Schineller will meet with representatives of the private sector on Monday, Tuesday and Wednesday, the sources said, before speaking with Mantega and Tombini Thursday and Friday. Both officials are expected to stress the government's commitment to fiscal discipline and inflation targets.

Schineller is also expected to meet with representatives of the Treasury, the Planning Ministry and the national development bank, BNDES.

The meetings are expected to play a crucial role in whether S&P decides to lower Brazil's rating. A S&P spokesman said the firm wouldn't "comment on speculation about our analyst's meeting," adding that its ratings are subject to "ongoing review."

A rating downgrade this year could further erode investor confidence in Brazil's macroeconomic policies and raise debt costs, making it tougher for President Dilma Rousseff to promote economic growth. That, in turn, could complicate Rousseff's bid for re-election in October.

Brazil is currently rated by S&P at BBB, the second-lowest investment-grade level. When it lowered its outlook to negative last June, S&P warned there was a one-in-three chance it would cut Brazil's rating over the next two years due to rising public debt and an erosion in macroeconomic stability.

In an attempt to regain market confidence and dodge a downgrade, Brazil last month promised to deliver a primary budget surplus of 1.9 percent of gross domestic product this year.

Such a target, which measures government budget savings before the payment of interest on public debt, was considered "realistic" by many investors, as well as competing rating agencies Fitch Ratings and Moody's Investors Service.

Investors and ratings agencies stressed, however, that they would closely monitor whether Rousseff will be able to meet that target, especially considering growing spending pressures during the election year.

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