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News Article

One Condition for Rescuing Companies/ Banxico Must Avoid Bailouts

By Ricardo Guzman | Mon, 04/27/2020 - 12:07

Company lifelines under one condition. President López Obrador said that he is not opposed to rescuing companies, as long as it is not at the expense of the treasury. When questioned about the Inter-American Development Bank (IDB) and Mexican Business Council (CMN) agreement to grant US$12 billion in loans to 30,000 SMEs, the president said he would reject the agreement if public funds are required. “My understanding is that it is the IDB's responsibility. It can go ahead if there is no cost to the nation,” he said. The president insisted that he will prevent the country’s debt from increasing. “This is to protect ourselves as a nation and to avoid any possibility of corruption.”

Asks Banxico to avoid bailouts. President López Obrador asked Banxico to avoid using loans to bail out companies. The president said that although the central bank is independent, the resources it manages come from public coffers. “Now that Banco de México has decided to allocate funds to support small and medium-sized companies, we must be very careful that the money is not used to rescue companies that had financial problems before the coronavirus outbreak,” he said.

Report on breaching companies. Minister of Labor (STPS) Luisa María Alcalde said 87 percent of the businesses and industries visited by the ministry comply with the health contingency plan, and named Coppel, Andrea, Bolim and Carnival on a list of companies that are not following health restrictions. She said that the largest number of companies that have not stopped operations are located in Jalisco, Mexico City, the State of Mexico and Baja California, which have also registered the greatest number of COVID-19 cases. Alcalde said Volkswagen, FCA, General Motors and Faurecia are among the companies fully following the federal strategy.

Support for the higher income segment. Those “from above” will also receive help in the face of the COVID-19 crisis, President López Obrador said. "Yes, we are supporting them, but we are no longer going to rescue companies,” he said. The president said the government would not increase taxes or bureaucracy for those starting businesses, adding that the freedom to do business without the need of giving bribes, having an austere government that does not cost society and true rule of law are among the benefits for the “30% percent of the higher-income population.” He also highlighted that for public works, such as the Santa Lucia airport or the Dos Bocas refinery, supplies and services from Mexican companies are used.

 

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Click HERE for full transcript in Spanish

Ricardo Guzman Ricardo Guzman Editor