Amid a deepening political and financial crisis, Fitch's debt downgrade on Brazil came as little surprise. David Pollard reports.
Inflation and bank rates in double digits, a sliding currency and a political standoff. The last thing Brazil needs is a sovereign debt downgrade. But that's what it got. Analyst Carlos Porto said it would have been a shock to get anything else. (SOUNDBITE) (Portuguese) ECONOMIC ANALYST, ANTONIO CARLOS PORTO, SAYING: "The country is losing international credibility, is losing its capacity to attract foreign investment, to create jobs, to create new taxes and increase its revenues. I think all this is terrible, but it was expected." The new Fitch rating is the second such - S&P downgrading Brazil to 'junk' back in September. The real continued its slide on the news - credit default swaps shooting up. But President Dilma Rousseff says she's not budging. Despite impeachment proceedings against her. (SOUNDBITE) (Portuguese) BRAZIL'S PRESIDENT, DILMA ROUSSEFF, SAYING: "At this time I am using all the instruments that the rule of law allows me to. I will fight against the illegitimate interruption of my mandate." Her opponents accuse her of breaking budget rules. Even key allies threatening to bolt her coalition amid a widening corruption scandal at state oil company, Petrobas. With a yawning fiscal deficit, the downgrade is a vote of no-confidence she does not need, says BGC Partners Mike Ingram. (SOUNDBITE) (English) BGC PARTNERS, MARKET ANALYST, MIKE INGRAM, SAYING: "Even if you have jumped through those particular hoops you've still got the ongoing issue of corporate governance and government credibility in Brazil and those of course are very, very long-term problems with very long-term fixes." A rise in commodity export prices might extricate Brazil, he adds. That's not something analysts see on the horizon for some time yet.