M. Continuo

Top Brazil newspaper says Rousseff has last chance to save mandate

RIO DE JANEIRO (Reuters) - A leading Brazilian newspaper said on Sunday that president Dilma Rousseff has one last chance to stem a growing political and economic crisis before being forced to step down.

Daily Folha de S.Paulo said in an unusual front-page editorial that Rousseff needs to take "drastic measures," including additional spending cuts and tax hikes, to make up for a 2016 budget gap that has already cost Brazil its investment-grade rating from Standard & Poor's.

Rousseff, re-elected by a thin margin for a second mandate in 2014, has been facing calls for an impeachment as several of her political allies are implicated in a massive corruption scandal at state-run oil company Petrobras and as a deep economic recession increases the unemployment rate.

Folha called for an end to some pension benefits and economic subsidies, as well as temporary cuts in health and education programs that are currently mandatory.

Rousseff ordered her ministers to find an additional 15 billion reais ($3.9 billion) in budget savings during a cabinet meeting on Saturday, daily Estado de S.Paulo reported on Sunday.

Folha said in its editorial that deep budget cuts are needed for the government to gain credibility before demanding more tax hikes that will face strong popular opposition.

"The country, however, has no choice" but to accept higher taxes, Folha said. "Neither has president Dilma Rousseff: if she bends under the weight of the crisis, she will have no option other than leaving her presidential duties and, eventually, the position she holds."

A spokeswoman for the presidential palace had no immediate comment on Folha's editorial.

($1 = 3.87 reais)

(Reporting by Walter Brandimarte; Editing by Andrea Ricci)

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