MEXICO CITY (Reuters) - Mexico’s proposed budget deficit goals for this year and 2014 will not be affected by some of the worst storm damage in decades, the Finance Ministry said on Saturday.
Mexican President Enrique Pena Nieto had previously said Congress would revise its proposed 2014 budget in the wake of the storms this month, which killed at least 147 people and left large swaths of the country under water, buckling bridges and destroying highways.
However, the Finance Ministry said the government would now shuffle existing funds to pay for the cleanup - estimated by Mexico’s insurers’ association to top 75 billion pesos ($5.7 billion), the highest bill ever from a natural disaster in the country.
“The costs associated with reconstruction will be met with available resources through the reorientation of some funds, but without affecting in any way the public deficit proposed for this year, or next,” the ministry said in a statement.
The government has a 12.5 billion peso emergency fund, but will seek to divert 5 billion pesos from road-paving to spend on reconstruction, it ministry said.
Mexico’s government will therefore stick to its aim, announced earlier this month, of widening the budget deficit next year to 1.5 percent of gross domestic product.
The government has also asked Congress to approve a deficit of 0.4 percent of GDP for 2013 after an economic slowdown this year hurt government revenue. Congress had passed a balanced budget for 2013 last year.
Finance Minister Luis Videgaray said on Friday that tropical storms Ingrid and Manuel will likely knock off about 0.1 percentage point from growth in 2013 and would temporarily boost inflation by no more than 0.15 percentage points.
Videgaray also said the economy, which contracted between April and June, would see stronger growth in the third quarter.
Mexico’s economy is heading for its weakest performance since 2009, barely growing in the first half of the year and sparking fears that the country is flirting with recession.
Pessimism about prospects for Latin America’s second biggest economy has increased due to the flooding, a poll of analysts this week by Reuters showed.
Reporting by Gabriel Stargardter; Editing by Simon Gardner and Christopher Wilson