* Budget bill sees inflation up at 5.14 pct in 2012
* Bill forecasts fiscal deficit at $4.23 billion
* 2012 budget forecasts oil at $79.70 per barrel
(Adds details, byline, previous GUAYAQUIL)
By Alexandra Valencia and Eduardo Garcia
QUITO, Nov 1 Ecuador President Rafael Correa
said on Tuesday the Andean country forecasts its economic
growth increasing slightly to 5.35 percent in 2012.
Increased investments helped Ecuador's economy grow 8.9
percent in the second quarter versus the same period last year,
and the oil-producing country is on track to meet its 5.24
percent growth target for 2011. [ID:nS1E78S16R]
"The (economic) growth we forecast for next year is 5.35
percent," Correa told reporters when asked about the 2012
The finance ministry said in a statement that the bill
forecasts annual inflation at 5.14 percent in 2012. Official
estimates forecast full-year 2011 inflation at 3.69 percent,
slightly higher than the 3.33 percent registered last year.
The budget bill states that public spending will increase
to $26.11 billion in 2012, up from $23.95 billion this year,
and that $1.46 billion will be used to pay public debt.
The bill will likely be approved by Congress, in which the
ruling Alianza Pais coalition and its allies have a majority.
The finance ministry said the budget forecasts a fiscal
deficit next year of $4.23 billion, but Correa said Ecuador has
already secured financing for the fiscal gap.
After excluding itself from debt markets by defaulting on
$3.2 billion in global bonds three years ago, Ecuador has met
funding needs with bilateral credit deals, mostly from China.
Ecuador signed a $2 billion credit deal with China in June
and took a $571 million loan from a Chinese bank last month,
which pushed debt commitments to China to about $7.3 billion,
including loans, advance payments for oil sales, and energy
project financing. [ID:nN1E75Q1PC]
High oil prices have allowed Correa to boost spending on
hospitals, roads and schools, which in turn has improved his
popularity among the majority poor. Increased state spending
has also stocked economic growth.
The budget forecasts average oil prices at $79.70 per
barrel in 2012. Ecuador produces about 500,000 barrels of oil
per day and it is OPEC's smallest member.
"Fitch considers that Ecuador's growth performance is
vulnerable to a decline in international oil prices, since the
government has limited counter-cyclical policy options given
the country's dollarization regime and limited financing
sources," the rating agency said in a statement last week.
(Additional reporting by Yuri Garcia; Writing by Eduardo
Garcia; Editing by Eric Walsh)