Mexico To Cut Debt, Finance Minister Says

Automotive Author: EqualOcean News Editor: Leci Zhang Jun 06, 2024 05:37 PM (GMT+8)

Mexico's finance minister says the country will respect the central bank's autonomy and cut its budget deficit. The move was seen as an attempt to calm investors about the impact of environmental and domestic reforms on economic stability


EqualOcean reports that during a conference call with investors on Tuesday, Mexico's Finance Minister assured that the country remains committed to reducing its deficit. This statement came after President-elect Claudia Sheinbaum confirmed that he would continue in his role during her administration.

According to informed sources, the government will continue to respect the autonomy of the central bank and seek closer cooperation with the heavily indebted state oil company, Petroleos Mexicanos (Pemex). The Finance Minister also mentioned that Juan Ramon de la Fuente, former Mexican ambassador to the United Nations and a senior member of Sheinbaum's campaign, will lead the transition team for the new government and was present at the call.

Following the election, the Mexican peso fell by 3.8%, marking its biggest one-day drop since June 2020. This statement aimed to reassure investors, as the stronger-than-expected majority vote indicated that the ruling party would be able to push through congressional reforms. Before the central bank's dialogue with investors began, the peso had already pared some losses, but it fell by another 0.7% after the call.

The Finance Minister stated that Mexico's deficit would be reduced to around 3% of GDP, and the country's public debt would remain on a sustainable path. He added that the government authorities would "availing ourselves from the support to be reflected in Congress in order to optimize the good use of public resources." Additionally, he noted that the government would seek strong communication with investors and credit rating agencies to affirm "macroeconomic stability and fiscal prudence and the feasibility of our fiscal targets" as priorities.

Marco Oviedo, a strategist at XP Investimentos who attended the call, described it as "very brief" and noted that it did not address the main concerns of investors, including a series of congressional reforms proposed by President Andres Manuel Lopez Obrador earlier this year. "The problem is that the issue is the reforms Morena wants to implement," Oviedo said.