BRASILIA (Reuters) - Brazilian President Dilma Rousseff said on Tuesday her government is firmly committed to fiscal adjustment but will not sacrifice social programs to balance its overdrawn public accounts.
"The government knows that the adjustment is fundamental for Brazil, but that does not mean that social policies will not be maintained," Rousseff said after extending for another four years a generous formula for calculating minimum wage increases.
"The best example is that we are today sending Congress legislation to increase the value of the minimum wage," she said.
Rousseff's government has adopted unpopular austerity measures to reduce Brazil's gaping fiscal deficit and save the country's coveted investment grade with credit agencies.
The belt-tightening steps, which include tax increases and stricter rules for access to unemployment and pension benefits, have run into opposition from Rousseff's coalition allies in Congress and even her Workers' Party.
In a move to appease disgruntled labour unions, Rousseff signed an executive order that extends through 2019 the formula used to calculate annual increases in the minimum wage, which is readjusted by the prior-year inflation plus the level of GDP growth from two years back, if positive.
Standard and Poor's on Monday maintained the stable outlook of Brazil's investment rating, a vote of confidence in Rousseff's efforts to clean up the country's finances.
However, the rating agency, which last year cut Brazil's rating to one notch above junk, said it could lower the outlook if Rousseff steps away from measures to shrink the deficit.
The ministries of finance, social security, labour and planning did not immediately comment on how much the renewal of the minimum wage formula could impact fiscal accounts.
(Reporting by Anthony Boadle and Alonso Soto; Editing by Richard Chang and Tom Brown)
