UPDATE 4-Brazil's Temer seeks constitutional change to curb public spending

martes 24 de mayo de 2016 16:59 GYT

* New government under pressure to turn around economy

* Finance minister says temporary tax increases possible

* Labor unions opposed to cuts in pension benefits (Adds RIC for Banco do Brasil)

By Alonso Soto and Silvio Cascione

BRASILIA, May 24 (Reuters) - Brazil's interim President Michel Temer said on Tuesday he would seek constitutional change to limit increases in public spending as part of a series of measures to curb a record fiscal deficit and regain investor confidence.

Temer, a centrist who took over from leftist President Dilma Rousseff two weeks ago after she was suspended pending trial, said the amendment would restrict growth in state spending to the previous year's inflation rate, excluding debt payments.

Constitutional change requires 60 percent support in both chambers of Congress at a time of bitter divisions following Rousseff's suspension on charges of breaking budget rules. She vigorously denied wrongdoing.

Temer said the move was the best way to restore Brazil's credit rating, bring down interest rates and drag Latin America's biggest economy from its worst recession in decades.

Brazil lost its coveted investment-grade rating in December due to its high deficit. Benchmark interest rates surged to 14.25 percent last year, stifling investment, as inflation hit double digits.   Continuación...