Banobras Program to Boost Economic Growth, Reduce InequalityBy Paloma Duran | Tue, 10/27/2020 - 13:13
Banobras’ Institutional Program for 2021-2024 was published on the Federation Official Gazette (DOF). Its objectives are to promote greater credit access for federal and municipal entities, to increase funding for infrastructure projects and to promote loans from commercial banks and private actors.
At the moment, Mexico’s investment in infrastructure represents 3.3 percent of the GDP compared to other Latin American economies like as Peru, with a 10.2 percent investment, and Colombia with a 7.9 percent, says Mexican government.
According to World Economic Forum’s Annual Global Competitiveness Report 2019, Mexico ranks 54 out of 141 in infrastructure investment levels. Banobras believes this is due to an irregular regional development in the country which has caused economic, social and environmental imbalances.
The development bank believes that investment in infrastructure will trigger long-term economic growth, growing employment and the development of productive sectors. Banobras has been essential for financing infrastructure in strategic sectors such as roads, energy and health, among others.
In the DOF report, it states that the country still faces significant gaps and areas of opportunity, especially in regions with economic hardship that require infrastructure development to boost economic activities that will provide a better quality of life to the population.
The bank will use its resources efficiently and its main focus will be on projects essential for the population, without neglecting the maintenance and administration of other infrastructure projects. In addition, better feasibility studies will take place with communities’ participation.
It is expected that in five years, the institutional program will provide the infrastructure investment essential for a post-COVID-19 economic reactivation. Banobras will partner with the Mexican government to achieve a sustainable growth to reduce inequality in marginal areas.
According to the DOF report , by 2024 the infrastructure objectives will be achieved and subsequently regional and national studies will be done to identify inequality gaps. The next Institutional Program will give priority to these gaps to maintain a constant improvement in the sector.
A better integration between sectors and government will strengthen a common vision that will allow for balanced growth. Banobras has stated that these infrastructure projects have a long-term vision that will prevail despite a change in government. According to the DOF, in 20 years Mexico will have the same infrastructure development and welfare levels as those in Canada and the US.