UPDATE 1-Mexico to issue more debt after economic slowdown bites
MEXICO CITY, Sept 26 (Reuters) - Mexico will boost the amount of debt it will issue in the fourth quarter, the finance ministry said on Thursday, after an economic slowdown this year crimped tax collection.
The government will sell 500 million pesos ($38.4 million) more a week in six-month peso-denominated bills, for a total of 10.5 billion pesos per week of the paper, the ministry said. Offers of three-month and one-year debt will also increase.
The offer of three-year and five-year debt will increase by 1 billion pesos to 10 billion and 9.5 billion, respectively, every four weeks. Offers of 10-, 20- and 30-year bonds every six weeks will increase by 500 million pesos.
The government expects the economy to grow 1.8 percent this year, about half the 3.5 percent rate used to calculate the 2013 budget. However, a soft patch and destructive flooding this month have thrown even the lower forecast into doubt.
The finance ministry asked lawmakers early this month to allow for a 2013 deficit of 0.4 percent of gross domestic product, excluding the debt of state-run energy firms, to make up for a shortfall in tax receipts.
Lawmakers had approved a balanced budget this year.
Floods in much of the country have caused severe damage to infrastructure that will drag down growth in the third quarter. The government is still calculating how much it will cost to repair destroyed roads and bridges.
At least 139 people have died due to the damage caused by tropical storms Ingrid and Manuel, and 53 are still missing.
Before the floods, the government asked lawmakers to approve a budget deficit of 1.5 percent of GDP next year to help fund programs to lift economic growth and it is unclear if reconstruction efforts could require even more debt.
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