Chile says to offer leanest budget in four years -report

SANTIAGO, Sept 22 Sun Sep 22, 2013 2:22pm EDT

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SANTIAGO, Sept 22 (Reuters) - Chile's public spending will grow by a moderate 4.5 percent next year, according to the budget bill that the government plans to unveil this month, Finance Minister Felipe Larrain said in an interview published in a local newspaper on Sunday.

The planned growth in spending is lower than the 4.8 percent expansion in the South American country's 2013 budget. The reduction is in due in part to lower expected prices for copper, Chile's top export.

"The 2014 budget will have a moderate increase in spending and will be the most austere in four years," Larrain told newspaper La Tercera.

Chile is also trying to adjust to a new reality of a more moderate copper price by boosting other exports and supporting growth of non-traditional sectors like asset management, Larrain told Reuters this month.

The 2014 budget will be executed by the candidate who wins the November presidential election or December run-off. Former Chilean leader Michelle Bachelet leads the polls.

Larrain told La Tercera he expects the U.S. Federal Reserve to start cutting its monetary stimulus program "in a few months".

The Fed defied investor expectations on Wednesday by postponing the start of the wind-down of its monthly $85 billion in securities buying, saying it wanted to wait for more evidence of solid economic growth.

Larrain said the Fed's decision to keep its bond-buying plans unchanged reflected concern about market reaction to a reduction rather than fundamental weakness in the U.S. economy.

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