MEXICO CITY (AP) — Mexico, following the lead of several countries around the world, has proposed making coins smaller and using cheaper metals to keep cost low amid the financial crisis and volatile metal costs.

The Mexican Senate on Thursday approved President Felipe Calderon’s bill to modify the country’s coinage. The plan awaits approval from the lower house of Congress, which will vote in February.

“We’re being hit hard economically, so we’re looking to spend more efficiently,” said Enrique Lobato, director of cash programming for Mexico’s central bank.

The Mexican economy is running a 1.8 percent budget deficit, the country’s first in years, and next year’s $224 billion budget will be tight.

Lobato said under Calderon’s proposal, the bank could save around $14.7 million per year in production costs.

Total production costs on coins this year reached nearly 1 billion pesos $73.5 million, he said. Costs include the price of metals and minting the coins. The bank produces around 1.5 billion coins each year.

Australia and New Zealand recently eliminated their 1 and 5 cent coins, and New Zealand in 2006 significantly reduced the size of its 10, 20 and 50 cent coins.

In the United States, the U.S. Mint is lobbying Congress to make the penny more cost-effective.

The 1-cent copper-colored disc now costs 1.2 cents to produce.

Countries often will change coin production when inflation and metal prices alter coins’ value and cost-effectiveness, said Francois Velde, a senior economist with the Federal Reserve Bank of Chicago.

“This most likely happens in times of high inflation, of sharp currency devaluation or in times of high commodities prices,” he said. “The lowest denominations are typically hit first, because inflation eats away at their real value.”

Mexico’s annual inflation hit a seven-year high of 6.2 percent in the first two weeks of November, and the peso has tumbled more than 30 percent against the U.S. dollar since Aug. 1.

Base metal prices, including copper and aluminum, had hit record highs this year, but have fallen nearly 60 percent from 2007 levels. Nickel has dropped 80 percent.

Arturo Anton, an economist with Mexico’s Center of Economic Investigation and Studies, said the projected savings on production costs would not have a profound economic impact.

“It’s something symbolic during the time of (economic) crisis,” he said.