Partial Economic Rebound, IMF Funds Arrive: The Week in FinanceBy Emilio Aristegui | Thu, 08/26/2021 - 13:15
This week, Banxico confirmed the reception of US$12.18 billion from IMF, which President Andrés Manuel López Obrador said would be used to pay the country’s debt, but Banxico warned that this would not be possible. Meanwhile, CAMESCOM reiterated the commitment of Spanish companies to continue investing in sustainable projects in Mexico.
In less positive news, Pemex is suffering significant setbacks after an explosion in its Ku Alfa platform in the Gulf of Mexico.
Ready? This is the week in finance!
Important Advice for Young Entrepreneurs
Juan Jose Cervantes, managing partner at Trebol Capital, shared important advice for young entrepreneurs with Mexico Business. He personally recommends being clear with definitions, “use a board of advisors for startup and small companies and a board of directors for an established company with the capacity to face the consequences that this type of governance brings.” Cervantes insisted that there is still a lot to work on when it comes to educating all parts of the board in Latin America.
Confusion between Bank of Mexico and President López Obrador
The Bank of Mexico (Banxico) confirmed through a press release the reception of US$12.18 billion from the International Monetary Fund (IMF) as part of the largest allocation of funds in history. President López Obrador intended to use the funds pay the country’s debt, but representatives from Banxico explained that this was not a viable possibility.
Partial Economic Rebound for Mexico in 2021
Karel van Laack, expert contributor and President of Atradius, told Mexico Business that “Mexico is expected to see only a partial economic rebound this year, with its recovery process likely stretching into 2024.”
Van Laack insisted that a major uncertainty regarding the country’s recovery relies on the federal administration of President López Obrador. So far, the country’s healthy banking system and solid external balances will provide Mexico with stability.
Embedded Finance is Taking Over Corporations
The concept of ‘embedded finance,’ defined as “the fusion of any product and financial services” by Bnext’s Cristian Huertas, has taken over fintechs and corporations. Huertas, Country Manager of Bnext, used Apple’s case to exemplify this new term: “the Apple card is powered by Goldman Sachs but it is offered in an Apple flavor.” Companies like Rappi and Oxxo are also exploring this new opportunity by undertaking different strides to complete their embedded finance goals.
Spanish Investments Pouring on Mexico
Spanish companies invested fiercely in Mexico during 2Q2021, with “Sonora reporting an increase of 335 percent in FDI year-over-year,” according to CAMESCOM. Jalisco increased its investment 124 percent, Queretaro 68 percent, Sinaloa 182 percent, Yucatan 62 percent and Veracruz 143 percent. An interesting turn took place with a survey from CAMESCOM which showed that, “the committee has identified that sustainability is relevant for 94 percent of companies with Spanish capital in Mexico.”
Pemex Platform Fire Causes Death and Cuts Mexico’s Oil Production
Pemex lost the platform and has, “remained out of operation, with about 421,000 barrels per day of oil lost and 125 wells offline,” said Pemex Chief Executive Octavio Romero. The accident cut a quarter of Mexico’s oil production, and the impact on Pemex’s “monthly production and exports has not yet been estimated.”