Oct. 17 (Bloomberg) -- Agustin Carstens, the head of Mexican President-elect Felipe Calderon's economic transition team, dashed speculation the next government will bolster spending more than previously said to fight poverty.

Carstens, former deputy managing director of the International Monetary Fund named yesterday to join Calderon, said he will help create a budget for the new administration.

Calderon, 44, plans to add 60 billion pesos ($5.5 billion) of spending in his first year to broaden access to health care, housing subsidies and other aid, his policy coordinator Ernesto Cordero Arroyo said in August. The next president would have to boost spending by much more to placate allies of losing presidential contender Andres Manuel Lopez Obrador, an advocate of the poor, said Juan Lindau, chair of the political science department at Colorado College in Colorado Springs.

``The main element that will reduce poverty in Mexico on a sustainable basis is not the social programs of government, it's how can we catalyze more investment and more employment creation,'' Carstens said in an interview today in Mexico City. ``It's a little bit misleading to try to assess the success of the antipoverty strategy just by focusing on how much direct spending the government can put together.''

Poverty Fight

Calderon, speaking after Mexico's election court ratified his win Sept. 5, vowed to embrace Lopez Obrador's agenda and make fighting poverty his top priority. Calderon takes office Dec. 1.

Lopez Obrador's campaign pledge, ``the poor come first,'' earned him support in southern states, where he won about 50 percent of the vote compared with a national average of 35 percent.

Calderon's victory margin of less than 0.6 percentage point in the July 2 election was the narrowest in history.

Carstens, who left the third-highest position at the Washington-based IMF to join Calderon, is considered a frontrunner to become finance minister in the new administration, Chappell Lawson, a political science professor at the Massachusetts Institute of Technology in Cambridge, said in a telephone interview.

Asked whether he wanted to become Mexico's finance minister, Carstens said ``of course.''

Carstens, 48, holds a doctorate in economics from the University of Chicago. From 2000 to 2003, he served as Mexico's deputy finance minister under Francisco Gil Diaz.

Pemex, Taxes

Mexico must increase investment in Petroleos Mexicanos, the country's state-owned oil monopoly, in order to make existing oil reserves last as long as possible, Carstens said.

Output from Mexico's largest field, Cantarell, is forecast to decline by 8 percent in 2006 to 1.86 million barrels per day from 2.03 million barrels per day in 2005, said Vinicio Suro, deputy director of planning and evaluation for Pemex's production and exploration unit, during an Aug. 2 conference call.

Mexico can decrease its dependence on Pemex by increasing tax collection, Carstens said.

``The first step is to make sure we are doing all that we can to collect what the legal framework allows us to,'' he said.

``We also have to cut spending because, in order to make people willing to pay taxes, it's essential the government is using its resources to generate added value and a benefit for them.''

To contact the reporters on this story: Patrick Harrington in Mexico City at pharrington8@bloomberg.net

Last Updated: October 17, 2006 18:20 EDT