Flu crisis to widen fiscal deficit: Mexican gov't

Special Report: World Tackles A/H1N1 Flu

MEXICO CITY, May 6 (Xinhua) -- A huge loss of tax income due to the A/H1N1 flu crisis will widen the fiscal deficit of the Mexican government this year, Treasury Minister Agustin Carstens said on Wednesday.

Carstens told the press that the impact of the influenza outbreak, suspending much economic activity for a few days, will result in an estimated loss of 10 billion Mexican pesos (781 million U.S. dollars) in tax revenue.

In order to continue boosting the economy, the federal government will have to cover the lost revenue instead of taking tax measures to recoup the loss, producing a bigger public deficit, the minister said.

The government's fiscal deficit is expected to rise to 1.9 percent or 2 percent of gross domestic product (GDP) this year, from the 1.8 percent projected in its budget, he said.

The treasury ministry said on Tuesday that the human flu virus will likely cause an economic loss of 30 billion pesos (2.326 billion dollars), or 0.3 percent of the GDP.

Carstens said that Mexico has been assured a financing from the World Bank and the Inter-American Development Bank, in long term, to face some of the pressures produced by this sanitary contingence.

The money given by the International Monetary Fund to the Mexican government "are kept as a contingent reserve in case there is a problem at the payment balance, which has not arrived yet," he said.