No crazy stuff, Mexico budget keeps expectations in check
MEXICO CITY: Mexico’s new leftist government presented a first budget aimed at calming nervous markets while honouring pledges to increase welfare spending, saying it would run a bigger surplus next year once interest payments on debt were excluded.
Finance Minister Carlos Urzua presented the budget during the weekend, setting out plans to find more money for both the elderly and unemployed youngsters by slimming down several government ministries and through forecasts of higher tax revenues.
The budget is a major test of President Andres Manuel Lopez Obrador’s economic credibility, which was shaken when he said on October 29 he was scrapping a partly-built US$ 13 billion new Mexico City airport on the basis of a referendum that was widely panned as illegitimate.
Lopez Obrador took office on December 1, and much of the new spending covered pledges made during the election campaign.
Markets might even be somewhat buoyed by the fact the spending plan is more or less what was expected, said Raul Feliz, an economist at the CIDE think tank in Mexico City.
“As a sort of relief that there’s no really crazy stuff in it,” he said.
The plan, which is due to by approved by Congress before the end of the year, forecasts a slight slowdown in economic growth to about two per cent next year from an estimated 2.3 per cent in 2018.