Chile's Bachelet scales back reform agenda due to slow economy

SANTIAGO (Reuters) - Chilean President Michelle Bachelet said on Saturday that some of her proposed reforms would have to wait because of the economic slowdown and tepid political support, but she pledged to push changes to the pension and education systems. Bachelet, who must work fast to cement her legacy in her last full year in office before 2017 elections, said she was preparing legislation to gradually make university education free and would work to hasten creation of a state pension fund. "We will continue with pending proposals - less numerous, which make it possible to complete the changes committed to," Bachelet said in her annual speech before Congress in the port city of Valparaiso. "There are also initiatives that we must reprogram because we have to consider restrictions on resources or the need to form broad agreements," Bachelet said, without specifying what initiatives would be postponed. Bachelet praised talks on a new constitution to replace one implemented by the country's former dictator Augusto Pinochet. She did not mention a reform that aims to strengthen organized labour in the South American country. Last month a court rejected as unconstitutional key provisions in that bill, such as a stipulation that companies can only negotiate with legally designated unions during wage talks. Bachelet was elected in a landslide in 2013 for a second non-consecutive term on pledges to reduce sharp inequality with an ambitious set of wide-ranging reforms paid for by tax hikes. Her approval ratings halved from over 50 percent when she took office in March 2014 to around 25 percent by the end of 2015. A financial scandal involving her family has damaged the centre-left leader's reputation. Weak economic growth, dragged by falling mining investment and a copper market rout, has also weighed in Chile, the world's top copper exporter. "Long-term strategies require sound public finances," Bachelet said. "I'm fully aware of the economic responsibilities of the state, even more so in the midst of reforms and a complex international scenario." Bachelet, who pitched a slew of new proposals to Congress in previous speeches, made no major new announcements this year. She commands a narrow majority in both houses of Congress, but is struggling to meet demands of her coalition, which ranges from centrist Christian Democrats to Communists. The right-wing opposition remains unpopular, but changes to the electoral system last year are encouraging a proliferation of new parties that can tap into dissent. (Reporting by Fabian Andres Cambero, Writing by Mitra Taj; Editing by David Gregorio)