AMLO Increases Spending on Social and Priority ProgramsBy Gabriela Mastache | Wed, 04/22/2020 - 11:40
To ride out the economic impacts of the pandemic, President López Obrador has presented a plan that aims to increase spending in social and priority programs. The plan presented during his daily morning briefing reaffirms the actions the government has been implementing for the past few weeks.
According to the president, the government will increase spending in social and priority programs by MX$622 billion (US$25.2 billion) in order to face the current economic recession the country is experiencing. In addition, the President mentioned that projects such as the Airport General Felipe Ángeles, the construction of the Dos Bocas refinery, the Mayan Train, the cultural space of Los Pinos and Chapultepec Park and the implementation of the tax-free zone in the northern border will continue.
Moreover, the president said the government was postponing expenses that were not priority and will provide 3 million loans for SMEs and focus on the creation of 2 million new jobs. We “will demonstrate that there is another way to face the sanitary crisis, the economic crisis … as long as corruption is not allowed,” he said.
Banxico announced yesterday that they were reducing the bank’s reference rate by 50 base points, which puts the current interest rate at six percent, which is in line with what the industry was expecting. Banxico also announced relief measures for the financial sector of MX$750 billion (US$30.4 billion). These measures are intended to strengthen the channels that are in charge of providing credit and to inject liquidity to the financial system.
The reception to Banxico’s measures was positive, with the CCE acknowledging the effort and hoping that fiscal measures would soon follow the announcement. Analysts agreed that given the lack of action from the federal government in fiscal policy, Banxico had no other option but to act decisively in its scope of action. With Banxico’s measures, the overall efforts of Mexico’s authorities account to 3.3 percent of the country’s GDP.