Mexico City  - Mexican President Felipe Calderon announced federal budget cuts in a televised address late Tuesday with the goal of saving about 14.5 billion dollars a year.

He cited the ongoing recession, which has cut into government revenues and forced him to look for ways to reduce spending.

The cuts that he plans to propose to Congress in the 2010 budget would include the closure of ministries for tourism and agricultural reform and the comptroller and a freeze on salaries for many federal employees. He proposed additional finance and energy reforms.

Calderon plans to reduce Mexico's budget deficit from currently about 2 per cent of the gross domestic product to 0.5 per cent of the GDP.

The measures include the introduction of a 2-per-cent tax on all sales, in addition to the current 15-per-cent value added tax, from which food and medicine are exempt, a rise in maximum income tax to 30 per cent from now 28 per cent as well as tax hikes on gambling, alcohol and tobacco.

Meanwhile, Calderon said that he plans to increase spending on certain social programmes that have proven successful in helping Mexico's poorest citizens, more than 30 million people who make up nearly one third of the population. (dpa)