* See lower growth, weaker peso ahead
* Fitch sees no problem with deficit size
By Miguel Angel Gutierrez
MEXICO CITY, Oct 19 The finance committee of
Mexico's lower house is set to approve a budget plan that will
seek a higher deficit than that proposed by President Felipe
Calderon's government, committee members said on Wednesday.
The committee will vote to allow the 2012 budget deficit to
reach 0.4 percent of gross domestic product, two members of the
body said, before a final showing of hands in the committee.
The government has proposed a deficit set at 0.2 percent of
GDP, excluding investment by state oil monopoly Pemex. Last
year's deficit cap was 0.5 percent.
Lawmakers would also vote to back a lower growth forecast
and change the expected currency exchange rate in 2012 to 12.80
pesos per dollar, from 12.20 per dollar in the government's
proposal, the lawmakers said.
"The federal government proposed estimated economic growth
for 2012 of 3.5 percent. We are thinking it will be less, 3.3
percent," said Sebastian Lerdo de Tejada, a deputy with the
opposition Institutional Revolutionary Party (PRI).
The part of the budget that deals with economic forecasts
is due to be voted on by the finance committee later on
Wednesday, ahead of a vote in the lower house on Thursday.
"There is an agreement about those numbers," Luis Mercado,
a deputy with the ruling National Action Party (PAN), told
Lawmakers from the PRI are the strongest faction in the
lower house of Congress and wanted to boost spending next year
to help offset an expected slowdown in global growth.
Mexico is struggling to recover from a deep recession in
2009. Weaker growth in its main trading partner, the United
States, has not helped.
Past budget debates have been carefully monitored by credit
rating agencies watchful that Mexico's blend of new revenue and
expenditures was prudent and sustainable.
Two years ago, Fitch Ratings and Standard & Poor's both cut
Mexico's credit rating in the wake of a budget battle, but all
ratings agencies have Mexico on a stable outlook currently.
"The size of the deficits at this point -- provided that
they are kept at a moderate level -- is not going to
fundamentally change our view on the rating," said Shelly
Shetty, head of Fitch's Latin America sovereign ratings group.
"We obviously don't foresee any negative factors at this
point for the rating."
But Alfredo Coutino, Latin America director for Moody's
Analytics, said it was unwise for Mexico to expand its budget
deficit when investors are closely eyeing government
commitments to fiscal prudence given Europe's debt crisis.
"This sends a bit of a negative signal to capital markets
and international investors," Coutino said. "This is
irresponsible in that it is the exact opposite of what other
countries are doing in restraining spending."
The PRI, which ruled Mexico for 71 years until 2000, is now
leading early polls to retake the presidency next July.