(Adds decision to stay)
By Maria Carolina Marcello
BRASILIA, June 12 (Reuters) - The Brazilian Social Democratic Party, the main ally of President Michel Temer, said on Monday it would stay in his coalition for now, despite a move by younger members to break away from the scandal-plagued government.
Speaking at an executive meeting of the PSDB, party leaders said a decision to stick with Temer was based on the need to support his austerity measures in Congress to balance Brazil's overdrawn fiscal accounts.
Temer's acquittal on Friday in an illegal campaign funding case dating from the 2014 election strengthened the president's position among some of those wavering in the PSDB.
With the PSDB on board, Temer is more likely to muster support for his economic measures and block any attempt to have the Supreme Court try him for corruption charges.
"The PSDB will not at this time make any move to leave the government," Senator José Serra, a former foreign minister in the Temer administration, told reporters.
"We have to continue in the government to back the reforms that are helping the economy recover. Indicators are improving substantially," the PSDB governor of Paraná state, Beto Richa, told Reuters.
With Brazil emerging from a two-year recession, Richa said international investors and credit rating agencies were raising their growth projections for this year. But those forecast are conditioned on the advance of austerity measures, he added.
Temer's administration has been shaken by accusations he endorsed payment of hush money to buy the silence of a potential witness in a corruption probe and took bribes from giant meatpacker JBS SA.
Temer is being investigated for corruption and obstruction of justice. Brazil's top prosecutor is expected to file charges against the president in the coming days.
Senior PSDB leaders managed to hold back a movement by younger lawmakers who want to quit the government and pull the four PSDB ministers out of Temer's cabinet.
Many of the party's 46 lawmakers in the lower chamber of Congress wanted to abandon Temer's coalition. They are worried voters will punish them at the polls next year for being part of a government widely perceived as corrupt.
"Our party has not won an election in 16 years and the electorate has changed a lot. Voters no longer tolerate traditional political practices," said another PSDB leader, requesting anonymity to speak more freely.
Corruption allegations that led to the ousting of the PSDB's former leader and presidential candidate in 2014, Aécio Neves, were a "bombshell" that weakened the party and made it imperative to take distance from Temer, he said. (Reporting by Maria Carolina Marcello, Ricardo Brito, Alonso Soto and Anthony Boadle; Writing by Anthony Boadle; Editing by Dan Grebler and Andrew Hay)