Brazil upgrade should lower risk premia-IMF's Singh

Thu May 1, 2008 1:32pm EDT
WASHINGTON, May 1 (Reuters) - Brazil's new investment-grade credit rating should further lower risk premia and buoy foreign investment in Latin America's largest economy, a senior International Monetary Fund official said on Thursday.
Anoop Singh, the IMF's director for the Western Hemisphere, said Standard and Poor's upgrade of Brazil's credit rating to "BBB-" also set the stage to deepen reforms, which would help the country achieve its full potential.
He said the announcement on Wednesday demonstrated investor confidence in the country's economic policies.
The government's economic program, supported by an IMF financial package, helped stabilize the economy following a 2002 crisis of investor confidence in the then new President Luiz Inacio Lula da Silva, who still leads the country.
"Their demonstrated commitment to this framework -- anchored in the fiscal responsibility law, inflation targeting, and flexible exchange rate regime -- has helped entrench macroeconomic stability and reduce vulnerabilities," Singh said.
Those policies had led to low inflation, higher growth, and less poverty and inequality, he added. (Reporting by Lesley Wroughton; Editing by Chizu Nomiyama)