Mexico 2011 deficit cuts likely less than sought

* Mexico lawmakers pare deficit cuts sought by president

* Analysts say 2011 budget plan in line with expectations

* Full budget due to clear congress by mid-November
(Recasts, adds background, analyst comment)

By Miguel Angel Gutierrez

MEXICO CITY, Oct 20 (BestGrowthStock) – A budget plan passed by
Mexican lawmakers on Wednesday will not lower the fiscal
deficit as much as President Felipe Calderon had wanted but
investors saw it going in the right direction.

Mexico’s opposition-controlled lower house of Congress
approved the income portion of the 2011 budget that calls for a
higher deficit and oil prices than those proposed by Calderon
in September.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For a factbox on the budget please see: [ID:nN19200690] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

While lawmakers did roll back some of Calderon’s austerity
plans, analysts said they were satisfied that the spending plan
was generally sound.

“The deficit seems to me consistent with the long-followed
fiscal policy in Mexico, a prudent fiscal policy,” said Benito
Berber, senior economist for Mexico and Colombia with Nomura
Securities in New York.

Lawmakers, wrapping up the voting session in the early
hours on Wednesday, agreed to allow the 2011 budget deficit to
touch 0.5 percent of gross domestic product, above Calderon’s
proposal of 0.3 percent.

That deficit tally does not include debt issued by
state-oil company Pemex which investors assume would get a
government bailout if the monopoly ran into trouble.

“(The budget) appears to be something that would be
reasonable, in-line with market expectations,” said Joydeep
Mukherji, a sovereign credit analyst at Standard & Poor’s.

The 2011 estimated price of a barrel of oil was set at
$65.40, higher than the $63 a barrel Calderon wanted.

The budget must now clear a vote in the Mexican senate but
it is not expected to be altered much by that chamber before it
heads to Calderon for his signature.

The full budget plan is due to clear Congress no later than
November 15.

Calderon asked lawmakers to keep a lid on deficit spending
when he presented his 2011 budget in September. Opposition
legislators said more outlays were justified as Latin America’s
No. 2 economy struggles out of a deep recession.
(Writing by Patrick Rucker; Editing by Andrew Hay)

Mexico 2011 deficit cuts likely less than sought