UPDATE 2-Powerful Tunisian union rejects cutting subsidies - key reform asked by lenders

(Adds further detail, context)

By Tarek Amara

TUNIS, Nov 10 (Reuters) - Tunisia's powerful UGTT union on Wednesday rejected any plans to cut subsidies, a stance against reform that will complicate the government's efforts to reach a deal with the International Monetary Fund on a rescue package.

UGTT spokesman Sami Tahri, speaking a week after the government resumed technical talks with the IMF, told reporters that a caretaker government now in place could out reforms.

"We reject any plans to cut subsidies and we refuse prices rises...Subsidies must be strengthened (to offset) a significant deterioration in purchasing power," Tahri said.

Talks with the IMF on a package, predicated on painful and unpopular steps to liberalise the economy, were halted on July 25 when President Kais Saied, faced with protracted government paralysis, dismissed the cabinet, suspended parliament and assumed executive authority.

Critics of the president described his moves as a coup, while major foreign donors whose financial assistance an IMF deal could unlock have urged him to return to a normal constitutional order.

International donors have raised the need for broad popular support in Tunisia for reforms to help tackle corruption and waste, meaning Saied would likely need backing from the UGTT - which represents one million workers and wields huge political clout - and major political party leaders to secure a deal.

He unveiled a caretaker government in October and has pledged a national "dialogue" but has yet to lay out a detailed plan to restore normal parliamentary democracy as donors demand.

"A temporary government in exceptional circumstances cannot implement economic reforms...There are reforms that may require five years (to carry out)," the UGTT's Tahri said.

The IMF has urged Tunisia to slash subsidies and its bloated public sector wage bill as well as privatise loss-making state-owned enterprises.

Saied installed the caretaker government last month to respond to a wave of street protests over poor public services, economic hardships and fragile social and environmental conditions.

(Reporting By Tarek Amara; Editing by Mark Heinrich)