Mexico's lower house approved a 2012 budget that calls for 3.7 trillion pesos ($274.59 billion) in spending, $4.37 billion more than the original proposal from President Felipe Calderon.

The budget, which does not need Senate approval, will now go to Calderon for his signature.

The document projects a 2012 deficit of around $5 billion, equivalent to 4 percent of Mexico's gross domestic product.

It took intense negotiations among the party blocs to reach consensus on a plan to increase government spending by 7.87 percent over this year's level.

Lawmakers agreed to boost expenditures for education, highways and support to agriculture, and to increase the amount of federal revenues going to Mexico's 31 states, especially in the area of law enforcement.

Despite the overall expansion in spending, the budget includes austerity measures such as freezing government hiring - except for law enforcement and public safety - and the salaries of senior and mid-level civil servants.

The spending and revenue projections are based on the assumption that Mexico's GDP will grow by 3.3 percent in 2012.