Brazil's Rousseff fires back at critics, vows fiscal discipline

RIO DE JANEIRO, June 14 Fri Jun 14, 2013 2:55pm EDT

RIO DE JANEIRO, June 14 (Reuters) - Brazilian President Dilma Rousseff on Friday angrily dismissed the growing chorus of media criticism of the country's lackluster economy as "terrorism," insisting that her government remains committed to fiscal discipline and fighting inflation.

With Brazil on track for the third straight year of disappointing growth and inflation running at the ceiling of the official target range, Rousseff's still-high popularity has edged lower and her stewardship of the economy has come under increased scrutiny in both the local and international press.

Many economists also have become more pessimistic about Brazil's economic outlook, citing worries about government spending and the country's struggle to increase investment rates. Those concerns prompted U.S. rating agency Standard & Poor's to warn last week that it could downgrade Brazil's debt.

In a speech on Friday in a sprawling shantytown in Rio de Janeiro, a stern Rousseff said the criticism was misguided and ticked off a list of Brazil's economic strengths - a robust job market, a low debt-to-GDP ratio, and a firm government commitment to keep public spending and inflation under control.

"They say that Brazil is a country in trouble.... Not only is Brazil not going through a rough patch, we are extremely solid," she said. "Everybody has to be humble and accept criticism, but not terrorism."

"We have enough resources to maintain investments and social spending, in a serious, responsible way that ensures solid public finances and keeps inflation under control," she added.

The speech was the second time this week that Rousseff forcefully addressed her critics and sought to reassure investors that Brazil remains committed to fiscal discipline and low inflation - two pillars of the country's hard-won economic stability over the past decade.

Other Rousseff administration officials have been sounding a similar note in their own media offensives over the past week, publicly backing the central bank's recent interest rate hike as a necessary step to slow consumer price increases.

Some economists caution that the government may find it hard to cut spending amid growing demands for cash ahead of next year's presidential election and the upcoming sporting events that Brazil will host, the 2014 World Cup and the 2016 Olympics.

Rousseff, a left-leaning economist who is widely expected to run for re-election in 2014, saw her approval rating slip slightly in two opinion polls over the past week, in part because of the sluggish economy and high inflation. Still, the polls showed she remains the clear favorite in next year's race.

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