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UPDATE 1-Brazil economy minister plays down spending spat with Bolsonaro

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BRASILIA, Aug 28 (Reuters) - Brazil’s President Jair Bolsonaro is committed to austerity and favors fiscally responsible economic stimulus, Economy Minister Paulo Guedes said on Friday, at the end of a week that exposed divisions between the two men over public spending.

Earlier this week, the economy ministry’s press office released a statement saying Guedes was not resigning, such was the fevered speculation surrounding his position after Bolsonaro rejected his proposal for a new cash welfare program called “Renda Brasil.”

Speaking in an online event hosted by steel group Aco Brasil, Guedes on Friday said there was no issue, and that debate between ministers who want to spend more and those who want to keep a tighter grip on the purse strings is normal.

The president has the final word on policy, and he is on the side of fiscal responsibility, Guedes said.

“There’s a lot of talk, a lot of crisis talk, of fights in the team. There’s nothing like that; we talk openly and transparently, and we have debates, it’s normal,” Guedes said.

“The president is committed to austerity, and at the same time he knows that there are critical (public) works that need to be addressed.”

Guedes said a decision on Renda Brasil will be made soon, and this may include the extension of emergency aid for millions of Brazil’s poorest people through the end of the year. Bolsonaro has said that monthly stipends will be lower than the current 600 reais ($111) but more than 200 reais.

Whatever is decided, it will comply with the government’s fiscal rules, notably the spending cap that limits growth in public spending to the rate of inflation, Guedes said.

He also said the economic recovery is accelerating strongly. The privatization process is being sped up too, with three or four large asset sales to be announced soon, Guedes added, mentioning Eletrobras, the post office and docks.

$1 = 5.40 reais Reporting by Marcela Ayres and Jamie McGeever; Editing by Sandra Maler and Tom Brown

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