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Brazil's Rousseff backs austerity and ending corruption

28 january 2015, 14:51

 Brazil's leftist President Dilma Rousseff, elected to a second term in October despite overseeing four years of sluggish growth, Tuesday stressed the need for lower spending to balance the books and urged an end to corruption, AFP reports.

"Having the public accounts in order is necessary to keep inflation under control, bolster economic growth and provide a sustainable guarantee of jobs and wages," Rousseff said after talks with her new cabinet.

Rousseff, who has faced a battle with some sections of her Workers Party (PT) over the need to use austerity to stem rising inflation boost growth, also demanded an end to corruption as investigators probe an alleged scandal at state-owned oil giant Petrobras.

"We must punish but not destroy firms (which) are essential to Brazil. We must close the door on corruption," Rousseff said, referring to a kickback scandal which emerged last year possibly involving dozens of politicians and billions of dollars.

The kickbacks resulted from over-inflated contracts between Petrobras, Brazil's largest company, and construction companies suspected of being part of a group that made under-the-table payments to directors of the oil firm in return for lucrative contracts.

Money was allegedly passed on to politicians, although none have been charged so far, in a scam worth an estimated $4 billion.

Rousseff herself chaired Petrobras from 2003 to 2010, coinciding with a period when the kickbacks were allegedly taken. But she denies any knowledge of the scheme.

Dozens of former Petrobras officials and top executives with construction companies have been questioned in the bribery case and nearly $50 million has been seized in the investigation.

Two weeks ago, Rousseff announced "gradual fiscal adjustment" and spending cuts of $8.4 billion a year through limiting discretionary spending on travel, services and purchasing as well as tightening access to unemployment insurance.

Brazil's finances have deteriorated in her first term amid massive provision of social welfare programs begun under PT predecessor Luiz Inacio Lula da Silva which lifted tens of millions of people out of poverty.

But while championing a dose of austerity, Rousseff vowed to protect workers' rights gained over more than a decade of PT rule.

"The adjustments we are making are necessary to stay on course while preserving social and economic priorities," she said.

"Labor rights are untouchable and it will not be our government, a workers' government, which will revoke them."

Brazil's central bank forecast this week that growth would barely come in above zero in 2015. Inflation is running at 6.99 percent, above a government ceiling of 6.5 percent.

Brazil also posted its first annual trade deficit in 14 years earlier this month amid a falloff in Chinese-led demand for its raw materials and lower manufacturing goods demand from struggling neighbor Argentina.

On jobs, however, the government can point to unemployment having hit an historic official low point of 4.8 percent in November.

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