Editor’s note: “International Business Corner” is a weekly column written by Joan Keston that provides information for people involved in or considering international operations. Keston is an international business consultant. Over the next several months she will be writing about important issues that international businesses face as they compete in the 21st century global business environment.

This article discusses the upgrading of Brazil’s debt rating.

RALEIGH, N.C. – Earlier this month Standard & Poor’s Ratings Services issued an upgrade of Brazil’s debt rating to investment grade status. This signals that Brazil is now officially recognized as a safe place for investors to invest. A credit analyst for S&P stated that the upgrade reflects the maturation of Brazil’s institutions and policy framework. Brazil’s Central Bank declared Brazil’s debt crisis over. (In the 1980s Brazil defaulted on its international debt and declared a moratorium on debt payments.)

There is a common joke in international business that goes more or less like this: Brazil is a country of the future … and always will be.

Has Brazil finally arrived?

Surviving Brazil

I first knew Brazil in the mid 80s when yearly inflation reached 1000%. This meant that you spent your cash as soon as possible because by the end of the month your money was almost worthless. Local relatively poor merchants, even those who couldn’t read or write and who knew nothing about international business, started telling you how much things cost in US dollars or some complicated monetary correction index. If you had any financial wealth, you tried to get your money into US dollars or out of the country as soon as possible.

Brazil’s foreign debt was gigantic and a moratorium on payment was declared. That greatly reduced Brazilians’ access to international financial markets. Long-term financing in Brazil was for a period of about three months. Business plans and projections were impossible to construct. Investing in the over-night financial market in Brazil was more lucrative than investing in any business. So why work?

It was the time of economic plans that within a day changed your life. There were no periods of adjustment or grandfathering situations based on legislation. Basic food supplies such as milk or meat were sometimes scarce. The middle class was shrinking, a middle class that we hardly would consider middle class in the US.

In an attempt to control inflation all bank accounts were frozen. This meant that individuals and corporate entities each had the equivalent of $1000 to spend, invest, operate, etc. All the rest of our money was restricted and unavailable to us for several years. We suffered through a month of absolute chaos.

Basically life in Brazil in the 80s and 90s was on a daily basis. It required a great deal of “jeito” and “jogo de cintura” to survive. (Brazilian expressions that basically mean to manage and be flexible.) You needed your relationships and the exchange of favors because the government, rule of law, business contracts, personal rights….all the things we in the US take for granted…..were of little import, value or assistance.

Has Brazil Finally Arrived?

Brazil’s credit rating has now been upgraded. Brazil is riding a boom in demand for beef, iron ore, soy and other key exports. It is a leader in ethanol production and independent of foreign oil supplies. According to its Central Bank, Brazil had a US$40 billion trade surplus last year and international reserves nearly tripled to US$188.2 billion in February. Rising foreign investment and high domestic interest rates brought record net currency inflows of US$87.5 billion. Brazilian companies have record profits and consumers are buying cars and homes on credit. Inflation is down and employment is up.

Brazil may be a good place to be or do business. However, I continually hear how difficult it is to do business in Brazil. There are many reasons for that; some understandable, some unconscionable. As in most developing countries, you need to do a business and strategic analysis, and have the right professionals to help you navigate Brazil.

About the Author: Joan Keston is the Managing Principal of Keston & Associates, Ltd., an international business consulting firm located in Raleigh, NC, and a Partner at Paladin and Associates, Inc. She has 25 twenty-five years of experience with mature as well as entrepreneurial companies, domestically and internationally, coupled with an executive managerial and legal background. Her firm facilitates international business transactions, and assists companies establish, grow and integrate their international operations. She can be reached at (919) 881-7764 and jkeston@kestonassociates.com