UPDATE 1-Brazil's Rousseff eyes fiscal-friendly stimulus measures -source
(Adds analyst comments, sources' comments, context and background on crisis)
By Alonso Soto
BRASILIA Jan 5 (Reuters) - Brazil's President Dilma Rousseff is analyzing changes to pension, tax and labor laws that would stimulate the country's ailing economy without relaxing her government's austerity drive, an official with knowledge of the matter told Reuters on Tuesday.
The official, who requested anonymity to speak freely, said the government was also considering additional measures, all designed to reduce business costs and bolster investment, but declined to give further details.
"The country needs stimulus measures, but without incurring fiscal costs," the official said. "We are not going to give more tax breaks or cheap credit. We are not going to use the past model."
Two other sources said no decision has been taken on the measures being discussed with politicians and business leaders.
Facing the worst recession in at least 25 years, Rousseff is under pressure from her Workers' Party and labor unions to jump-start the economy with the fiscal benefits and subsidized credit that eroded Brazil's finances during her first presidential term from 2011 to 2014.
"It is very difficult to think of any measure that can bring some growth in the short term given the limited fiscal space," said Juan Jensen, partner with Sao Paulo-based consultancy 4E Consultoria. "The announcement of economic reforms sounds like the best option at this moment, but they are very difficult to implement."
After a series of public disagreements over the pace of austerity, Rousseff replaced fiscal hawk Joaquim Levy as finance minister, naming leftist economist Nelson Barbosa as his successor. Continuación...