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BRASILIA, July 22 (Reuters) - Brazil's largest party, the PMDB, will back the reduction of the government's fiscal savings target and ultimately approve austerity measures despite political tensions, an influential senator told Reuters on Wednesday.
Senator Romero Juca, a PMDB leader in the upper house, said he "applauds" President Dilma Rousseff's decision to slash the key target to rebuild credibility.
Critical of Rousseff's economic policies, Juca said he is confident his party colleagues will approve legislation later this year to cut expenditures and bolster revenues.
"We have discussed it and the PMDB will support this new target," said Juca. "The tensions that we see now are part of a political battle, but nobody can argue against the numbers and reality. We need to turn things around."
A deepening political crisis that has soured Rousseff's ties with her allies in Congress, including the PMDB, threatens to derail her plans to shore up public accounts and to keep from losing Brazil's investment grade rating.
Falling revenues forced Rousseff's government to cut the primary surplus target on Wednesday to 0.15 percent of GDP from 1.1 percent. That change has to be ratified by Congress.
Rebellious lawmakers have watered down many of Rousseff's cost-cutting measures and passed bills to raise spending. Juca himself raised questions in the government when he proposed an amendment to change the fiscal target earlier this month.
Still, Juca said Rousseff could allay concerns by moving quickly to include her allies in economic policy decisions.
"The government needs to open up a dialogue, propose policies, but more importantly, listen more," said Juca, who publicly supported Rousseff's rival in last year's presidential election.
Facing record-low popularity, Rousseff is struggling to defuse the political crisis triggered by the investigation of dozens of allied lawmakers for alleged involvement in a corruption scandal at state-run giant Petrobras.
The speaker of the lower house of Congress and PMDB leader Eduardo Cunha broke ties with the government last week over accusations Rousseff is conspiring to incriminate him in the scandal.
Juca said the Senate will move to approve a bill to repatriate money Brazilians hold abroad that could bring 20 billion reais ($6.2 billion) in extra revenues this year. He said another measure to raise corporate taxes will also get the green light from his party.
$1 = 3.22 Brazilian reais Reporting by Alonso Soto; Editing by Ken Wills