By Nathan Gill and Sebastian Boyd

     Sept. 29, 2008 (Bloomberg) — Chile, the world’s biggest copper producer, expects to post a budget surplus equivalent to 3.7 percent of its gross domestic product next year, the lowest since 2003, as economic growth slows to 4 percent.

     Copper may average $2.90 per pound in 2009, Finance Minister Andres Velasco said today. The metal has slumped 22 percent to $2.92 since July 15, when the budget office forecast an average price of $3.56 for 2008. Copper has averaged $3.59 this year, according to information compiled by Bloomberg.

     Velasco has promised to increase social spending next year while boosting total budget expenditures by 5.7 percent, less than the 6.8 percent expansion projected for 2008. The government is slowing spending growth after inflation reached the fastest in 13 years.

     The budget “balances on one side the necessity for stability and order in the economy and at the same time, we fulfill the commitment we have with people,” Velasco said today, according to a transcript of his remarks e-mailed by the Finance Ministry press office. Chile will hold presidential elections at the end of 2009.

     The country’s economy will grow 4.5 percent this year, Velasco said yesterday, down from 5.1 percent last year. The government expects a surplus of 6.7 percent for 2008, the budget office said in July.

     The long-term copper price will be $1.99 per pound, Velasco said today.