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UPDATE 3-S&P sees slower-than-expected fiscal progress in Brazil

(Adds comment from finance minister, analyst)

SAO PAULO, Jan 12 (Reuters) - Brazil has made slower-than-expected progress in cutting government spending ahead of presidential elections, a Standard & Poor's director said on Friday, a day after the agency downgraded the country's rating deeper into junk territory.

The agency on Thursday lowered its long-term rating for Brazil sovereign debt to BB- from BB, with a stable outlook, citing less timely and effective policymaking.

S&P managing director Lisa Schineller mentioned successive delays in voting a plan to trim social security as a sign of "wear-and-tear" slowing down progress in balancing the budget.

The rating reflects "slippages and mixed signals in terms of tackling fiscal policy correction," she said in a webcast, adding that growth-inducing microeconomic reforms or increased austerity efforts could lead to an upgrade.

Markets mostly brushed off the downgrade as investors had largely anticipated such a move since President Michel Temer met with ratings agencies in December.

Finance Minister Henrique Meirelles said the downgrade did not come as a surprise and had already been priced in, calling a ratings upgrade a "matter of time."

Oxford Economics said in a report that it was unlikely that other agencies would follow suit, and Brazil should regain investment grade by 2022.

Some analysts even said the downgrade could help Temer pressure lawmakers into approving his pension plan. Still, analysts at Eurasia Group said the short-term political consequences of the downgrade would be "minimal," keeping an estimate of a 30 percent probability for the bill's approval.

Lawmakers scheduled a lower-house vote on the unpopular pension overhaul for Feb. 19, but Schineller highlighted the difficulty of passing the measure ahead of an October general election which seems "even more open" than previous ones.

Former President Luiz Inácio Lula da Silva, who has criticized Temer's austerity platform, is currently leading polls but could be barred from running if his conviction for corruption is upheld on Jan. 24.

Below him, the field is splintered among potential candidates from law-and-order congressman Jair Bolsonaro and businessman-turned-mayor João Doria to nationalist Ciro Gomes.

Asked about the elections, Schineller said S&P would balance campaign rhetoric against what is likely to be effectively implemented.

"Campaigning on difficult fiscal reform is not something that will generate a lot of votes," she said. "You have seen, over time in Brazil, that pragmatic policies come into play afterwards, including from former President Lula in the 2002 election cycle." (Reporting by Bruno Federowski; Editing by Chizu Nomiyama and Andrew Hay)