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NEW YORK (Reuters) - New York City is looking to save $2 billion over the next year and a half by forcing agencies to implement spending cuts and a hiring freeze, according to a letter sent Tuesday by the head of the city's Office of Management and Budget.

"All agencies must submit plans to cut spending for the remainder of this fiscal year by an amount equal to 2 percent of your agency's FY 2012 budget and 6 percent for FY 2013," OMB director Mark Page said in a letter to department heads.

OMB said the agency reductions, which must be turned in by October 18, could be met by "personal service cost reductions," such as in health insurance, unemployment insurance, workers' compensation and overtime.

If economic conditions worsen, Page said that further cuts may be needed.

Page also said that Mayor Michael Bloomberg had ordered a hiring freeze "for the foreseeable future," adding that only jobs for health and safety positions could be filled.

"We're looking at extreme economic uncertainty and state and federal governments that are likely to further cut funds they return to the city," New York City Deputy Mayor Cas Holloway said in a statement. "We've preserved services essential to maintaining safety and quality of life to this point through prudent planning and a willingness to make the hard decisions, and we'll do that again this year."

(Reporting by Chip Barnett; Editing by Jan Paschal)

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