UPDATE 2-Brazil's Rousseff says more credit compatible with monetary policy

viernes 15 de enero de 2016 12:46 GYT

(Adds Rousseff comments)

By Alonso Soto and Lisandra Paraguassu

BRASILIA Jan 15 (Reuters) - Expanding credit through state banks does not undermine Brazil's current efforts to curb government spending and the central bank's likely tightening of monetary policy, President Dilma Rousseff said on Friday.

The leftist leader also said the government, struggling to restore growth to an economy suffering its worst recession in decades, is worried about low world oil prices.

The government could inject fresh capital into embattled state-run oil company Petrobras if oil prices continue to drop, Rousseff said. She added that it had scrapped plans to auction oil blocs in an offshore region known as the subsalt, even though projects there remain technically viable.

Rousseff said Brazil will not be able to grow again if it does not control inflation and balance the government's overdrawn books. But she said an expansion of credit was also needed.

"Tight fiscal policy is necessary, but that does not mean that we cannot have a credit policy ... aimed at certain sectors," Rousseff told reporters during a briefing on Friday.

The government and central bank are trying to restore growth while also reining in inflation, currently running at an annual rate of 10.67 percent, the highest in 12 years. The bank, despite pressure from Rousseff's leftist Workers' Party and labor unions, has signaled it is ready to raise rates at its monetary policy meeting next Wednesday.

On the role of the central bank, the left-leaning president said: "The central bank has autonomy to set its policies, but it is still accountable to the rest of the government."   Continuación...