December 1, 2016 / 2:32 AM / 2 years ago

Argentina's Senate approves 2017 budget

BUENOS AIRES, Nov 30 (Reuters) - Argentina’s Senate on Wednesday approved the 2017 budget proposed by the new center-right government, paving the way for a lower fiscal deficit once President Mauricio Macri signs the bill into law.

The budget, little changed from the government’s proposal, calls for cutting the deficit to 4.2 percent of gross domestic product from 4.8 percent currently and predicts the economy will emerge from recession and grow 3.5 percent next year.

The Senate passed the bill 59-8, a sign Macri still has support in Congress even though his party does not having a majority and the economy has yet to return to growth.

“It implies an economic adjustment that we understand as excessive,” said Juan Manuel Abal Medina, opposition senator and president of the Legislative Budget Committee, who nevertheless voted in favor of the budget to collaborate with the government.

Macri faces mid-term congressional elections next year, a test of how his austerity push is faring with voters after 12 years of leftist rule.

Macri had originally promised to reduce the deficit to 3.3 percent of GDP, but his government now plans to wait until subsequent years to make further reductions, fearing cutting too aggressively would stall economic recovery.

Economic activity data in September fell from the previous year as well as from August. (Reporting by Maximiliano Rizzi and Caroline Stauffer; Editing by Lisa Shumaker)

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