Long-term budget goals key for Brazil confidence, candidate says

SAO PAULO, March 25 Tue Mar 25, 2014 6:17pm EDT

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SAO PAULO, March 25 (Reuters) - Brazilian state governor Eduardo Campos, a probable candidate for president in the October election, said the implementation of long-term goals for budget spending and debt reduction are necessary to restore confidence that has been eroding in Latin America's largest economy.

In a speech at a Council of Americas event in São Paulo, Campos, the center-left governor in Pernambuco state, suggested his commitment to clear fiscal policy goals in order to enhance transparency. The presidential campaign will only begin after parties officially nominate their candidates, around June.

His remarks came a day after ratings company Standard and Poor's lowered Brazil's sovereign debt rating to "BBB minus," the lowest investment-grade ranking, in the wake of a deterioration in public finances. Campos said the S&P decision underscored the failure of efforts by President Dilma Rousseff's administration to postpone any spending reduction ahead of the election.

"Changing parties in power is necessary. A change in government could give citizens the necessary reassurance that goals will be delivered," Campos said in the speech. He declined to elaborate on which of the potential goals he would implement.

According to polls released over the past three weeks, Rousseff would beat any potential challenger outright in the first round of the ballot, although support for her has been slipping marginally. Campos, the grandson of legendary Brazilian socialist leader Miguel Arraes and who may run on a more business-friendly platform than Rousseff, is currently third in polls, with voter support around 7 percent to 8 percent.

Economists, company executives and investors have lashed out at Rousseff's policy decisions to renegotiate contracts with electricity companies, forbid state-controlled oil company Petróleo Brasileiro SA from raising fuel prices and use state-run banks to expand credit at borrowing costs that fail to cover default and other risks. (Reporting by Guillermo Parra-Bernal; Editing by Ken Wills)

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