Brazil's Rousseff wants debt down

By Raymond Colitt

BRASILIA (Reuters) - Brazil should continue reducing its public debt after 2010 and central bank policy should place more weight on job creation, the minister favored by President Luiz Inacio Lula da Silva to run in 2010 elections said on Friday.

"We still think we'll need to maintain an effort in 2010 and the following years. We are very interested in a downward trend (in debt), ensuring macroeconomic stability," Lula's Chief of Staff Dilma Rousseff said at the Reuters Latin American Investment Summit in Brasilia.

Her comments contrasted with those made this week by the head of Lula's Workers' Party that Brazil's next president would have more leeway to relax fiscal targets in order to pursue a more ambitious social agenda.

Lula has won market plaudits for keeping a tight rein on Brazil's debt, but faces pressure from some in his party to spend more to combat the effects of the economic slump.

Rousseff also proposed an overhaul of the public sector to tackle its notorious inefficiency but ruled out a major reform of labor laws, which critics say are too rigid and hurt Brazil's competitiveness.

Rousseff, who last month revealed she was undergoing chemotherapy after having a tumor removed, declined to say whether she will run in the October 2010 elections. Lula, who has to step down after his current second term ends, has said he favors her candidacy, as have party leaders.

In her first interview since the announcement of the diagnosis of lymphoma, a form of cancer, Rousseff said her illness was difficult but that she had been helped by support from the public.

"Once you decide to face it, you've walked half the path," she said.