UPDATE 2-Moody's cheers Brazil fiscal plan, but lawmakers wary
(Adds reaction from lawmakers, markets, comment from analysts)
By Walter Brandimarte
RIO DE JANEIRO, Sept 15 (Reuters) - Brazil's recently announced austerity measures are a positive development, a senior analyst with Moody's Investors Service said on Tuesday in a vote of confidence for President Dilma Rousseff's plan to close a 2016 budget deficit.
Yet lawmakers gave the proposed taxes and spending cuts a chilly reception, underscoring doubts that the president can get her defiant coalition behind the unpopular plan.
Political wrangling over the austerity program reinforces investors' fear that Brazil may soon lose its investment-grade rating from a second agency following Standard & Poor's decision to downgrade the country to junk last week.
Brazil's currency fell 1.7 percent in Tuesday trading, giving back strong gains recorded on Monday, when traders cheered the austerity announcement ahead of a congressional backlash.
In an emailed statement on Tuesday, Moody's analyst Mauro Leos welcomed Rousseff's plan to address the deficit of 30 billion reais ($7.8 billion) before interest payments projected in her 2016 budget bill. He said such measures are critical for Brazil to preserve its Baa3 credit rating and stable outlook.
"The proposal represents a more balanced approach than previous ones that mostly consisted of revenue measures," Leos wrote. "This proposal addresses the persistent increase in expenditures over the years."
The plan includes spending cuts and tax increases totaling 65 billion reais, but half that target depends on the return of a controversial tax on financial transactions known as the CPMF. Continuación...