BRASILIA, Brazil, Sept. 10 (UPI) -- Standard & Poor's on Wednesday downgraded Brazil's investment-grade credit rating to "junk" status due to the country's political turmoil and growing government debt.
Brazil's rating was lowered from BBB-minus to BB-plus despite the government's attempts to avoid the downgrade by imposing austerity measures, which have not halted sliding commodity prices amid the country's recession.
Standard & Poor's expects three consecutive years of a primary deficit and net general debt if the current political and economic climate continues.
"The political challenges Brazil faces have continued to mount, weighing on the government's ability and willingness to submit a 2016 budget to Congress consistent with the significant policy correction signaled during the first part of President Dilma Rousseff's second term," Standard & Poor's said in a report.
Brazil is dealing with a political crisis surrounding Rousseff, who has been accused of corruption as the Petrobras bribery scandal continues.
Rousseff headed Petrobras, a semi-public oil and gas company, as apparent briberies took place. She was exonerated by authorities, but senior members of her government have been charged.
Standard & Poor's said it could revise the outlook if Brazilian politics stabilize amid the corruption allegations. The government would need "consistent policy execution" that would "staunch fiscal deterioration and strengthen GDP growth prospects."
But the U.S. rating agency warned Brazil needs to act or another downgrade will be in the South American country's future.
"The negative outlook reflects what we believe is a greater than one-in-three likelihood of a further downgrade," according to Standard & Poor's.