Bonds News

Brazil's Rousseff aims to cut debt, interest rates

* Rousseff aims to lower debt so interest rate can fall

* Plans to tackle tax reform that eluded incumbent Lula

* Says not yet considered who to run, Finance Min.

BRASILIA, Nov 2 (Reuters) - Brazil’s new President-elect Dilma Rousseff struck an investor-friendly tone in televised interviews on Tuesday, talking of plans to reduce taxes, public debt and interest rates.

Rousseff, from incumbent President Luiz Inacio Lula da Silva’s Workers’ Party, won Sunday’s election by a wide majority, as voters looked to her to sustain strong economic growth and unprecedented prosperity.

In some of her first comments on economic policy since her victory, Rousseff said she wanted to bring down the debt-to-GDP ratio of 42 percent so that interest rates, among the world’s highest, could start to be lowered.

“If that happens, there is no technical reason why Brazil’s interest rate would not converge with international interest rates,” she said.

Brazil’s benchmark interest rate, known as the Selic, is currently 10.75 percent.

Markets reacted serenely to the outcome of the election which pitted the former guerrilla during Brazil’s dictatorship, against the Social Democrat Party’s Jose Serra.

In debates with her rival, Rousseff made much of her belief in the role of strong state firms to generate wealth and jobs.

Sao Paulo stock exchange's Bovespa index .BVSP rose 1.26 percent on Monday. Brazilian markets were closed on Tuesday due to the All Saints Day bank holiday.

Rousseff said in an interview with the SBT news program that she aimed to reform the tax system, a task that eluded Lula but which she may find easier after the elections beefed-up the governing coalition’s majority in Congress.

She said this would include the “fundamental” requirement of lower taxes on investments and a review of income tax.

“You can’t wipe these out altogether or the pension fund would go bust but there could be a reduction that would make it possible to improve productive conditions in the Brazilian economy,” Rousseff said.

Rousseff said she also expected interest rates on consumer credit would eventually begin to fall, helped by a low percentage of loan defaults.

The former energy ministry and chief of staff to Lula said she had not made decisions about who would head the Finance Ministry and central bank, but she said responsibility for the country’s economic stability ultimately came down to her.

Tuesday’s newspapers speculated that Lula would seek to clear up some of the thorniest political and economic issues the government faced, spending some of his sky-high popularity ratings if needed, to spare Rousseff once she took office.

But Rousseff appeared to play down that idea.

“I don’t think the president will take tough measures. He will do what he has to do. There’s no point opening a can of worms when things are going well,” she said.

(Editing by Carol Bishopric)

Additional reporting by Pedro Silva in Rio de Janeiro