Brazil's Rousseff to make payroll tax exemptions permanent

BRASILIA (Reuters) - Brazilian President Dilma Rousseff on Wednesday said that payroll tax exemptions used as stimulus against the country's economic slowdown will become permanent.

Rousseff, facing the fourth straight year of sluggish growth and an expected bid for re-election in 2014, told reporters that in 2011, when she took office, the government had underestimated the severity of the global financial crisis. But critics, she added, are still too negative on the outlook for Latin America's biggest economy.

Rousseff made the comments at a breakfast with journalists in Brasilia, the capital.

The corporate payroll measures are one of various tax breaks that Rousseff has used as her main tool to stem a stark slowdown in Brazil's economy.

After growth of as high as 7.5 percent during a decade-long boom that fizzled just after Rousseff took office, Brazil's growth is expected to slow to barely more than 2 percent by the end of her four-year term.

Rousseff is also struggling with weakening consumer demand, sluggish industrial production, low investment in the economy and inflation, which during her time in office has risen persistently close to the official tolerance limit of 6.5 percent.

As she heads into an election year, Rousseff is trying to persuade Brazilians and foreign investors that Brazil's economic outlook is not as dire as some critics suggest.

She is also highlighting measures to spur growth and buffer her administration at a time when some senior officials are preparing to leave the government and run for gubernatorial and other offices.

Rousseff said a pending ministerial reform should take place before Brazil's annual Carnival holidays, which this year start in late February.

After heavy criticism of accounting tricks used by the government to waver on budget targets in recent years, Rousseff said she is studying what the official target in 2014 will be for the so-called primary budget surplus. Finance Minister Guido Mantega later Wednesday said the government will likely announce the target in January or February.

The primary surplus, used as a gauge of the public sector's ability to pay debts, consists of all government expenditures minus interest payments on debt.

(Reporting by Jeferson Ribeiro, writing by Paulo Prada; Editing by Nick Zieminski)