Mexico's economy could grow by 4 to 4.5 percent in the fourth quarter and 3.2 to 3.3 percent for the year, and the government will be able to offer pensions for the elderly in 2006, a government official said Wednesday. 

Government institutions "have begun to give other services, to make social protection more democratic, in ways that you are going to see soon," Eduardo Sojo, head of the presidential office of public policy, told a news conference. 

"Pensions for elderly people who are in extreme poverty, you'll see that next year." 

Outlining new anti-poverty initiatives, Sojo stressed that the administration of President Vicente Fox must achieve higher growth, and said it had do something about rising state-employee pension costs and falling oil reserves in the year it has left in office. 

Sojo also said the government plans to launch soon a program to give housing loans to the millions of self-employed or extremely poor who have been left out of the current boom in government-sponsored home lending. 

The elderly pension program follows on the heels of a hugely popular program implemented by former Mexico City Mayor Andres Manuel Lopez Obrador, who leads in polls on the July 2, 2006 race to succeed Fox. 

Fox's administration has decried programs like Lopez Obrador's - which is available to all elderly persons regardless of income - as populist. The federal program would be available only to the poorest old people. 

While touting the enormous progress Mexico has made on inflation, debt profiles and interest rates - Sojo said Mexico "no longer needs any more (foreign) reserves" - he acknowledged that achieving higher growth rates is "the main challenge" for the government. 

Sojo said the government expects the economy to create about 500,000 jobs in 2006 - well below Fox's 2000 campaign promise of 1 million new jobs per year. 

He also warned that some problems loom in the future on several fronts. For example, Mexico currently replaces less than half the oil it extracts with new reserves. 

"If we don't invest in the oil sector, our oil will run out by 2014," Sojo said. 
He also noted that shortfalls in government pension funds will amount to about US$9.34 billion (euro7.92 billion) in 2006, and if nothing is done, could reach US$20 billion (euro17.4 billion) by 2012.