Brazil's Rousseff Backs Austerity, Ending Corruption

"Having the public accounts in order is necessary to keep inflation under control, bolster economic growth and provide a sustainable guarantee of jobs and wages," Rousseff said after talks with her new cabinet.

Rousseff, who has faced a battle with some sections of her Workers Party (PT) over the need to use austerity to stem rising inflation boost growth, also demanded an end to corruption as investigators probe an alleged scandal at state-owned oil giant Petrobras, AFP reported.

"We must punish but not destroy firms (which) are essential to Brazil. We must close the door on corruption," Rousseff said, referring to a kickback scandal which emerged last year possibly involving dozens of politicians and billions of dollars.

The kickbacks resulted from over-inflated contracts between Petrobras, Brazil's largest company, and construction companies suspected of being part of a group that made under-the-table payments to directors of the oil firm in return for lucrative contracts.

Money was allegedly passed on to politicians, although none have been charged so far, in a scam worth an estimated $4 billion.

Rousseff herself chaired Petrobras from 2003 to 2010, coinciding with a period when the kickbacks were allegedly taken. But she denies any knowledge of the scheme.

Dozens of former Petrobras officials and top executives with construction companies have been questioned in the bribery case and nearly $50 million has been seized in the investigation.

Two weeks ago, Rousseff announced "gradual fiscal adjustment" and spending cuts of $8.4 billion a year through limiting discretionary spending on travel, services and purchasing as well as tightening access to unemployment insurance.

Brazil's finances have deteriorated in her first term amid massive provision of social welfare programs begun under PT predecessor Luiz Inacio Lula da Silva which lifted tens of millions of people out of poverty.