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CITY OF MEXICO (Expansion) –
Andrés Manuel López Obrador, presidential candidate and his team aim to grow the economy by 6% when his administration ends and so break the trend of the annual average of 2.5% of the last 40 years.
To achieve this, the 2018-2024 Nationwide Plan coalition is considering various promises, which the candidate reiterated in his first speech as the virtual winner of the presidential contest, and reproduced in the media interviews by Carlos Urzúa, who will be secretary of the Treasury, in the next federal administration.
The specialists consulted by Expansión stress that the revival of the economy will not be a simple task, because the promises must be made by developing and redirecting public expenditure, but without increasing the level of public debt and maintain the primary surplus.
1.- Increase the minimum wage. The proposal is to increase by 15.6% each year, by the end of the six-year period to reach 171 pesos a day, plus the inflation that was generated during the period.
In the short term, this measure would help improve the purchasing power of Mexican families and boost domestic consumption, but it would reduce the attractiveness of the country because low labor costs would be a factor. are an incentive for foreign investment, says Bank of America. Merril Lynch in a report.
Currently, the minimum wage is 88.36 pesos a day. As part of the renegotiation of the North American Free Trade Agreement (NAFTA), teams from the United States and Canada have asked to reduce wage gaps with Mexico, after seeking investment more equitable.
2.- Economic support for older and younger adults. He offers a universal pension for all the elderly, 1,500 pesos a month, including retirees from the IMSS and the ISSSTE. For this, more than 78 000 million pesos a year should be allocated in the public budget.
Scholarships for young people who do not study or do not work (ninis), from 3,600 to 2,400 pesos per month, to 300,000 young people per year, for which 109,490 million pesos (mPa) are necessary.
In the short term, these support measures would increase domestic consumption, boosting economic activity in the country, according to Oxford Economics.
However, the costs of these programs may contradict the goal of not increasing debt, therefore, the necessary resources should be obtained from budget adjustments, a task that will not occur. is not simple, and that can take more than a Héctor Villarreal, director of the Center for Economic and Budget Research (CIEP).
3.- Freezing the prices of gasoline in real terms. This means that prices for this fuel can not increase more than the general rate of inflation in Mexico.
Although this measure benefits the income and consumption of Mexican families, it can affect Mexico's financial equilibrium. If international reference prices exceed inflation in the country, the government will have to put resources to ensure that the promised price margins remain, explained Nymia Almeida, an analyst at Pemex in the Moody & 39 rating agency.
. 4.- Reduce VAT at the border. In order to increase consumption in this area, the project of the elected candidate plans to raise this tax from 16% to 8%.
The director of the CIEP believes that this promise jeopardizes the balance of public finances of Mexico, because it means a decline in fiscal resources for the public sector, a complicated situation, because every year the budget is more under pressure by the Pension Expenditure and Payment of the Service of the Public Debt.
Read: The 3 Risks for Mexico Once the Elections Ended
5.- Do not raise taxes. This proposal involves keeping the income tax at a cap of 35% and VAT at 16%. For the new government, this will mean not increasing revenues through this channel and seeking other sources for greater social and investment spending, according to Jordy Juvera, an economics associate at HR Ratings. According to the economic team of López Obrador, savings of up to 400,000 million pesos could be achieved by reducing the salaries of senior officials, spending on supplies and services such as mobile phones, consultants , cars and personal services. investment
6.- Maintaining the autonomy of the Bank of Mexico, since the early hours of Monday, Carlos Urzúa reiterated this commitment to investors.
This would prevent unilateral government decisions such as capping the benchmark interest rate or setting private sector lending quotas, and helping to pursue the monetary policy objective to keep inflation at the limit, said Mr Geroges. Harcherian, a bank analyst at Moody's Investors Service, at a post-election press conference.
7.- Maintain NAFTA. López Obrador said that he would maintain this commercial treaty in force. It should be noted that trading partners are currently participating in a negotiation to modernize, the goal is to maintain access to competitive consumer goods and business investment in Mexican territory.
Recently, Jesus Seade, appointed by López Obrador to renegotiate this treaty, announced that he would support the work that the Mexican negotiating team led by Ildefonso Guajardo, Secretary of Economy, has done so far.
It is expected that the renegotiation process will resume this month and that the transition team will participate, said the undersecretary of foreign trade, Juan Carlos Baker, last week.
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