Banxico Debate Pushed Back; UK, Mexico Sigh Trade AgreementBy Peter Appleby | Thu, 12/17/2020 - 16:44
The controversial law reform that would force Banxico to purchase foreign cash in Mexico and potentially put it into contact with funds derived from illicit activities has been shelved. The debate expected to take place on Monday did not happen and will not happen until February 2021. Meanwhile, Mexico signed a continuity agreement with the UK, promising to maintain trade under current regulations until 2021 when the countries will begin talks to deepen the connection. ECLAC said Mexico’s economy will grow 3.8 percent next year but stressed that many factors can influence the forecast.
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The debate about changes to Banxico’s role in foreign cash collection was delayed by the Chamber of Deputies’ on Monday and has now been pushed back to February 2021.
The controversial law change, which would make Banxico responsible for purchasing foreign cash circulating in Mexico and, say critics, place it at risk on the international stage, had been passed by the Senate last week. But the backlash to the proposal was definitive and it appears that the government is now reconsidering the plan.
Opponents to the change believe it puts Banxico in danger because the central bank would be responsible for foreign inflows, which may well contain money from illicit activities.
Mexico and the UK have agreed to continue the trade relation they have in place as the UK seeks to reconfirm international trade deals and find new ones ahead of leaving the European single market.
The intention of the continuity agreement is to maintain trade between the two countries before beginning negotiation on expanding trade in 2021. The current value of the trade between the two countries is US$6.69 billion, said the UK’s Secretary for State of International Trade, Liz Truss.
The Mexican government announced that "Mexico and the UK will maintain the preferential commercial relationship they have enjoyed under the EU-Mexico Free Trade Agreement (TLCUEM) since 2000”.
The UN’s Economic Commission for Latina America and the Caribbean (ECLAC) has forecast 3.8 percent GDP growth for Mexico in 2021, stating that plenty of challenges must be overcome on the country’s path to economic recovery.
ECLAC head Alicia Bárcena said that even though the growth prediction was positive for the region, it would not come close to recouping the historic 9 percent contraction in the country’s GDP this year. The recovery is also sensitive to fluctuations in COVID-19 cases, which are still rising in Mexico, as well as the success of the vaccination program that the federal government will rollout this month. Fiscal stimuli will be essential for Mexico and other countries of the Latin American region, she said, and warned that “an early removal of stimuli could flunk recovery”.