(Adds quote from minister, other indicators)
BUENOS AIRES, Sept 15 (Reuters) - Argentina's 2018 budget bill forecasts economic growth of 3.5 percent next year and average annual inflation of 15.7 percent, Treasury Minister Nicolas Dujovne told Congress on Friday.
The bill proposes a 2018 primary fiscal deficit of 3.2 percent of gross domestic product (GDP) as previously announced. But it lowered the expected 2017 deficit to 4.0 percent from 4.2 percent previously.
"We will continue to reduce spending on the national public administration," Treasury Minister Nicolas Dujovne said in presenting the bill to lawmakers.
The average exchange rate for 2018 is seen at 19.3 pesos per U.S. dollar. The government also revised its 2017 average expected exchange rate to 16.7 pesos per dollar, down from the 17.92 included in the 2017 budget.
The budget foresees a financial fiscal deficit, including interest payments, of 5.5 percent of GDP, down from 6.2 percent in 2017. The 2018 trade deficit is seen at 284.1 billion pesos ($14.7 billion at the expected average 2018 exchange rate), due to a 6.8 percent increase in imports and a 5.6 percent increase in exports.
The average inflation expected in the 2018 budget marks a drop from the 24.5 percent expected in 2017, according to the bill. The central bank is targeting year-end inflation between 12 percent and 17 percent this year and between 8 percent and 12 percent next year.
The budget includes a reduction in economic subsidies, including to energy and transport, worth 0.6 percent of GDP, confirming a Reuters report from last month. That will bring total spending on subsidies to 1.6 percent of GDP, down from 2.3 percent in 2017.
Capital spending, including infrastructure investments, will rise by 21.5 percent in nominal terms to remain at 1.9 percent of GDP. Social welfare spending will rise to 12.6 percent of GDP, from 12.4 percent in 2017, while overall revenues are expected to fall by 0.2 percent of GDP to 18.8 percent. (Reporting by Maximilian Heath and Luc Cohen; Writing by Luc Cohen; Editing by Chizu Nomiyama)