October 17, 2010 / 3:18 PM / 7 years ago

Brazil presidential front-runner may cut debt - report

SAO PAULO (Reuters) - Dilma Rousseff, the front-runner in Brazil’s presidential election, could cut government spending if elected, Planning Minister Paulo Bernardo told O Estado de S. Paulo newspaper in an interview on Sunday.

Brazil's presidential candidate Dilma Rousseff of the Workers' Party speaks during a television debate in Sao Paulo October 10, 2010. REUTERS/Nacho Doce

Bernardo, a member of Rousseff’s Workers’ Party, said any curbs on public spending are unlikely to be radical because the country is not in danger of a sudden surge in inflation, Estado reported. Calls made to a Planning Ministry spokeswoman in Brasilia for a comment were not immediately answered.

“Dilma won’t have to take a U-turn (in spending), because there are no ongoing inflationary risks. But it is evident that, if some fine-tuning has to be done, it will have to be done,” Bernardo said in an interview.

Bernardo also said that in the event that Rousseff wins the presidency, the government will need to revamp its policy of awarding pay raises to public employees so “it fits more with low inflation rates,” Estado reported.

He added that public wages are “pretty good valued, well above inflation,” but ruled out a freeze in wage increases right after the election.

The report came as investors looked for hints regarding Rousseff’s budget-cutting credentials. She has defended an increase in the size of government to execute ambitious social programs and investments spearheaded by incumbent President Luiz Inacio Lula da Silva, her political mentor.

The presidential race has narrowed to a statistical dead heat in recent polls, suggesting that a recent corruption scandal, plus a controversy over Rousseff’s abortion views, have eroded support for the career civil servant that Lula has been grooming as his successor.

Bernardo criticized proposals by Rousseff’s opponent, former Governor and Minister Jose Serra, to boost the minimum wage more than 15 percent. The cost of Serra’s proposal could add up to 24 billion reais ($14 billion) to current annual expenses, Bernardo told Estado.

“Serra doesn’t say where that money is going to come from,” Bernardo said.

($1=1.66 reais)

Reporting by Guillermo Parra-Bernal, editing by Maureen Bavdek

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