Government Policies Not What the Country Needs: Analysts

According to experts and analysts, the actions announced by the president to ride out the economic effects of the pandemic will not have the expected result, since they are counterintuitive to the current crisis situation. Rather than reducing spending, experts believe that in times of economic crisis governments should engage in countercyclical measures, increase spending and incur in debt to not have low morale among government employees.

Yesterday, in his morning daily briefing, President López Obrador presented a series of measures the government would carry out to help the economy. These measures included increased spending in social programs and savings in other non-essential activities, continuity in the administration’s priority infrastructure programs such as Dos Bocas refinery, the Mayan Train and the Airport General Felipe Ángeles, as well as further salary reductions for public administration employees.

It is not the first time that employees from the administration are confronted with salary reductions. When President López Obrador came into power, he announced salary and non-monetary benefit reductions. In past weeks, the President announced further salary cuts and the disappearance of Christmas bonuses for high-ranked public administration workers to generate savings to face the pandemic.

Experts interviewed by El Economista agree that the announcements made by the public administration not only lower the morale of public administration employees but further reduce the operational capabilities of the public administration, which was already diminished after previous cuts, to face the pandemic and the economic crisis. Moreover, experts believe that the actions taken by the president will boost the effects that the economic crisis will have in the country.

Though the president’s announcement has not been well received among experts, measures taken by Banxico have been not only been welcomed but also applauded by analysts. In an interview with El Economista, Raymundo Tenorio, Emeritus Professor from Tecnológico de Monterrey, says that the measures taken by the central bank are within its legal scope and are designed to ensure that families and MSMEs obtain actual relief amid the economic crisis. According to Tenorio, Banxico’s measures are unprecedented in Mexico but fairly similar to measures that the US Federal Reserve and the European Central Bank have taken in the past.