In the midst of the negative news flow around the globe, S&P on 18th  November raised the Sovereign Rating of Brazil.

The long term foreign currency rating was raised to BBB from BBB-, and the local currency rating was raised to A- from BBB+. The outlook is stable.

During the first year of the Rousseff administration, the fiscal results have been better than the original budgets, providing greater scope for more flexible monetary policy to fight the negative effects of a potential decline in external demand.

"The upgrade of Brazil is supported by the current administration's growing track record of prudent macroeconomic policies, including fairly consistent primary surpluses of close to 3% of GDP," said Standard & Poor's credit analyst Sebastián Briozzo.

"The combination of Brazil's sustained political commitment to cautious economic policies, its diversified economy, and its gradually improving external profile should moderate the impact of potential external shocks and sustain its long-term growth prospects, in our opinion," Mr. Briozzo added.

Standard & Poor's expects per capita real GDP to increase by 2.1% in 2011 and 2.4% in 2012, barring an unexpectedly severe deterioration in external conditions. Under the current scenario, Brazil's net general government debt is expected to decline only gradually over the next three years from the 41% of GDP estimated for year-end 2011.

S&P is the third rating agency to upgrade the rating of Brazil. The Finance Ministry of Brazil said that the upgrade shows that the government is on the right path.

Brazil government is infact towards the right direction and should take care of the inflation along with fiscal spending to remain stable.