Image credits: SergeJF
/
News Article

COPARMEX: Mexico City’s Financial Support is Insufficient

By Jorge Ramos Zwanziger | Thu, 12/24/2020 - 08:18

The COVID-19 pandemic has greatly affected Mexico, and in recent days Mexico City has seen a spike in cases like never before. This situation has led authorities last week to enforce the Red-Light status in Mexico´s Traffic Light System. As a result, the Mexico City government has presented four programs that will offset these sanitary protocols, since many are concerned that a Red-Light status, will greatly impact business owners. The Minister of the City’s Finances, Luz Elena González, revealed details concerning the programs in El Financiero:

  1. Credit options for micro and small companies, with a MX$500 million (US$24.9 million) budget, which will be distributed in 50,000 microcredits and paid in 24 months. There is a zero percent interest rate, and funds will be available starting January 15.
  2. Economic support for people working in restaurants, both in the formal and informal sectors. This initiative will help around 100,000 employees with a MX$2,200 (US$109.5) payment for workers living in Mexico City.
  3. Uniforms and school supplies will be handed out through “Mi Beca para Empezar”, to help children in Mexico City´s Public Education System (SEP). Over 250,000 children will benefit from funds varying in size MX$710-900 (US $35.3-44.8).
  4. Fiscal economic support aimed to benefit activities in the hotel and restaurant sectors that will cost approximately MX$20.5 million (US$1.2 million).

The strategy aims to diminish the effects of the Red-Light status in the city, but the Mexican Confederation of Business Owners declared that the economic support planned by the Mexico City Government (COPARMEX) is insufficient, reports Forbes Mexico. The COPARMEX says an additional MX$834 million (US$41.5 million) from the city´s government will be allocated in light of the pandemic. This amount is less than a third of what the COPARMEX recommends: US$3,200 million. Forbes Mexico explains that the closure of non-essential activities in the city would force 10,000 businesses to close. COPARMEX says it is the responsibility of the city's government to find alternatives that will allow a better assignation of public spending to help businesses and to support formal employment.

The COPARMEX also mentioned two important programs that should be implemented in the city: the creation of a technical halt program that would allow workers to receive their paycheck if operations stop due to COVID-19, which would cost around MX$2.5 million (US$124,485), and a six-month temporary tax exemption, which would benefit the city with a MX$728 million (US$36.25 million) tax collection.  Mexico City´s Government has declared that certain economic activities are non-essential.  Therefore, COPARMEX advised Mexico City policymakers to identify non-essential programs in their administration plan. This, in order to make a budgetary reassignment to activities considered more essential, such as the US$3.2 billion budget needed for a proper economic response to sanitary measures. 

The data used in this article was sourced from:  
MBN, El Financiero, Forbes Mexico
Photo by:   SergeJF, Flickr
Jorge Ramos Zwanziger Jorge Ramos Zwanziger Junior Journalist and Industry Analyst