|Mexico's Lower House Passes Spending Part of 2011 Budget in 454 to 13 Vote|
Adriana Lopez Caraveo & Carlos Manuel Rodriguez - Bloomberg
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November 17, 2010
Mexico’s lower house of Congress approved the 2011 budget this week with a smaller deficit and a spending increase of 8.2 percent in nominal terms compared with this year.
The lower house voted 454 to 13 in favor of the spending portion of the budget, which calls for 3.44 trillion pesos ($280 billion) in outlays. Lawmakers modified the total spending of 3.35 trillion pesos proposed by President Felipe Calderon on Sept. 8.
The bill, which now goes to Calderon for signing, shifts 98.6 billion pesos of spending, Luis Videgaray, head of the budget committee and member of the Institutional Revolutionary Party, or PRI, told reporters earlier today.
Roberto Gil, also a member of the lower house budget committee from the National Action Party, or PAN, said in an interview that the reallocations from the president’s original proposal go mainly to the agriculture and infrastructure sectors.
The funds were taken mostly from cuts in government operating expenses, deficit increases, a higher oil price and taxes on cigarettes and energy drinks such as those sold by Red Bull GmbH.
The Congress last month approved the income portion of the budget with an estimated oil price of $65.40 per barrel and a deficit equal to 0.5 percent of gross domestic product, excluding debt from state-owned oil company Petroleos Mexicanos, or Pemex. Mexico’s 2010 budget calls for a deficit of 0.7 percent of GDP.
The budget approval comes as Mexico’s economy is rebounding from its worst slump since 1932 on the back of export growth. The government allayed concerns about the strength of public finances by approving a wider deficit and tax hikes last year.
The budget plan approved by the lawmakers doesn’t include a reduction in the country’s value-added tax, which had been sought by the Institutional Revolutionary Party and opposed by Calderon.
Mexican exports, buoyed by a 44 percent rise in auto sales abroad, climbed 21 percent in September from a year earlier. The central bank forecasts the economy will grow 5 percent this year and 3.2 percent to 4.2 percent in 2011. The economy contracted 6.5 percent last year.
To contact the reporters on this story: Adriana Lopez Caraveo in Mexico City at adrianalopez(at)bloomberg.net; Carlos M. Rodriguez in Mexico City at carlosmr(at)bloomberg.net
To contact the editor responsible for this story: Joshua Goodman at jgoodman19(at)bloomberg.net