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Fitch Ratings lowered Brazil’s debt rating to the cusp of junk, delivering the fourth downgrade under President Dilma Rousseff’s watch, and said it could cut the grade again as government finances deteriorate. Stocks and the real fell.

Brazil’s credit rating was lowered one step to BBB-, the lowest investment grade, with a negative outlook, Fitch said in a statement, citing the government’s rising debt burden, difficulty in shoring up its budget and a slumping economy. Standard & Poor’s cut the country to junk on Sept. 9, its second downgrade since Rousseff took office, while Moody’s Investors Service moved Brazil to the lowest investment grade in August.

The downgrade comes as prospects worsen for Latin America’s largest economy amid persistent above-target inflation, forecasts for the longest recession since the 1930s and a rout in the country’s stocks and currency markets. Meanwhile, Rousseff is struggling to find supporters in Congress for her plans to shore up the budget amid record-low popularity driven by a sweeping investigation into allegations of graft at the state-controlled oil producer.

“Economic and fiscal underperformance is likely to persist while political uncertainty could continue weighing on broader confidence,” Fitch said in a statement. “The difficult political environment is hampering progress on the government’s legislative agenda and creating a negative feedback loop for the broader economy.”

Since Rousseff took office at the beginning of 2011, the Ibovespa has fallen by about 70 percent in dollar terms, while the real has plummeted 57 percent. Brazil’s real slumped 0.2 percent to 3.8218 at 2:50 p.m. in Sao Paulo. The Ibovespa fell 0.2 percent to 46,631.04.

While Finance Minister Joaquim Levy proposed a new round of spending cuts and tax increases after the downgrade by S&P, not much has been done as Congress gets bogged down in political turmoil. The focus in Brasilia remains on whether or not Rousseff will face impeachment, even after she reshuffled her cabinet early this month to try to shore up support among lawmakers.

‘Wake-up Call’

"This is a good wake-up call," said Carlos Gribel, the head of fixed income in Miami at Andbanc Brokerage. "To make matters worse, all news coming out of Brazil are about the political crisis, the fiscal reform is lying below the radar now."

S&P gave the country a negative outlook when cutting the nation’s sovereign rating. Moody’s downgraded Brazil to the cusp of junk Aug. 11 while keeping a stable outlook.

Fitch first upgraded Brazil to investment grade in May 2011, at the beginning of Rousseff’s first term and following the commodity-driven boom years of her mentor and predecessor, Luiz Inacio Lula da Silva. During his eight years in office, the Ibovespa stock benchmark surged almost sixfold while the real more than doubled in value, the best performance among major currencies.

(Updates stocks and the real in fifth paragraph.)