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Mexico's Fox Seeks to Use Oil Revenue to Cut International Debt
Sept. 6 (Bloomberg) -- Mexican President Vicente Fox's proposed spending plan for 2006 seeks to use revenue from record high oil prices to reduce the nation's international debt to its lowest in more than three decades.

``High oil revenue has a non-recurring nature, so we must use it to strengthen our infrastructure or save it to mitigate the impact of a possible decline in oil prices on public finances and the national economy,'' Fox, 63, said in a message to legislators in the budget.

Fox's plan would allow Mexico, the world's sixth-largest oil producer, to cut foreign-currency debt to 6.8 percent of gross domestic product, ``the lowest in the nation's recent economic history,'' from 9.8 percent in June. Fox is also proposing that the government posts its first budget surplus in 12 years in 2006, his last year in office, to leave the economy in good shape for his successor.

The president is proposing the 2006 budget be based on an average price of Mexico's crude exports of $31.50 per barrel, compared with $27 for this year. He said oil revenue that exceed $31.50 per barrel must go to ``savings and investments.''

The price of Mexico's Maya crude, which accounts for most of Mexican oil exports, almost doubled this year and hit a record $54.19 per barrel on Sept. 1. Today it fell $1.15, or 2.2 percent, to $51.93 at 11:20 a.m. New York time.

Fox proposed total spending next year of 1.88 trillion pesos ($176 billion), about the same as what was approved by congress for this year after discounting for inflation, to produce a surplus equivalent to 0.2 percent of gross domestic product. His budget plan assumes economic growth will accelerate to 3.6 percent from a target of 3.5 percent for this year, inflation will slow to 3 percent from 3.7 percent and the peso will weaken to 11.40 to the dollar from 11.00.