More Sustainable Investment Options Arrive to Mexican Shores

Citibanamex-BlackRock has added to the country’s sustainable investment options. Meanwhile, the country’s national debt has grown and a proposal from the federal government and the CCE for a pensions reform has been announced.

More Sustainable Investment Options for Mexican Consumers

Following the launch of Santander’s “SAM-ESG” sustainable investment fund, Citibanamex and BlackRock jointly launched their own sustainable investment option named Global ESG Balanced Strategy in Foreign Currency fund. The fund is fully ESG compliant and will be backed by MSCI. The launch provides more sustainable investment options in Mexico in line with a rise in demand for sustainable investment around the world. There was a 34 percent rise in global sustainable investments between April 2017 and April 2019, Bloomberg reports.

Mexico’s National Debt Leaps

Mexico has been placed fifth among emerging economies for the highest increase in national debt by the International Institute of Finance following the economic impact of COVID-19. According to the institute, “Mexico’s obligations (in relation to its national debt) increased 12 percent annually with respect to GDP” in 1Q20. While fifth in the world, Mexico is third-placed in the region behind Chile and Brazil that saw their debt obligations jump during the same period by 30 percent and 20 percent, respectively. The report also found that the financial sector was carrying one of the country’s largest debt burdens, equivalent to 27.7 percent of the country’s GDP.

Reform Proposal for Pensions System

The federal government and the Business Coordinating Council have proposed a reform to the country’s retirement system after months of discussions. The proposed reform would increase the contribution of employers from 5.150 percent of an employee’s base salary to 13 percent within 8 years, while reducing the amount of contributions workers need to make from 1,250 to 750. The suggested overhaul, which Minister of Finance Arturo Herrera had said in June was “90 percent ready,” was needed because in the current system workers are not financially prepared for their retirement years.