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BRASILIA, June 12 (Reuters) - The main ally of Brazil's scandal-hit President Michel Temer will stay in his coalition despite a move by younger members to break away from what they view as an irremediably corrupt government, party leaders said on Monday.
Speaking just before an executive meeting of the Brazilian Social Democratic Party, or PSDB, they said a decision to stick with Temer was based on the need to support his austerity program in congress to balance Brazil's overdrawn fiscal accounts.
Senior leaders of the party have 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.
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.
"The government has retained its legitimacy by not being removed by the electoral court, and our party is committed to its policies that are needed for the recovery of the economy," national executive member Jose Anibal told Reuters.
Temer's unpopular fiscal reforms, particularly an overhaul of the costly pension system, are seen as crucial for Brazil to bring a gaping budget deficit under control and regain investor confidence.
But 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.
Another PSDB executive member said a majority 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," the PSDB leader said, requesting anonymity to speak more freely.
Corruption allegations that led to the ousting of the PSDB's former leader and presidential candidate in 2014, Aecio Neves, have weakened the party and made it imperative to take distance from Temer, he said.
The lawmaker wants the party to remove its ministers from Temer's government while making clear to markets that it fully backs his reform proposals. (Reporting by Alonso Soto and Anthony Boadle; Writing by Anthony Boadle; Editing by Dan Grebler)