Mexico’s Finance Secretary estimates economy could “easily” grow more than 5% in 2021

RIO DE JANEIRO, BRAZIL – In 2020, the Mexican economy had its steepest contraction since the Great Depression and plummeted 8.5% at an annual rate, hit by the ravages of the coronavirus pandemic.

The official added in a videoconference that he expects higher fiscal revenues due to the recovery of crude oil prices and that the debt will begin to decrease, following the more favorable than expected performance of the economy at the end of 2020 and in view of better forecasts for the performance of the Gross Domestic Product (GDP).

Recently, the central bank also improved its growth forecast for local GDP in 2021, when it expects it will recover 4.8% instead of the 3.3% it had previously estimated.

For his part, Treasury Undersecretary Gabriel Yorio told UNAM students that the administration of President Andrés Manuel López Obrador wants to “close the (tax) evasion gap before discussing a potential reconfiguration of the tax structure.”

Herrera told Reuters on March 11th that the government is in talks with regional authorities about their fiscal needs, which will help make a decision this year on whether there are conditions to carry out an expected tax reform.

“I believe there is room to reconfigure the structure without the need to increase taxes and provide greater progressivity to the country’s tax structure,” Yorio said in a virtual presentation.

Although Mexico has long suffered from weak tax collection, López Obrador pledged not to increase the tax burden in the first three years of his administration, a period that ends in December.

Mexico’s tax collection as a percentage of GDP is the lowest of the 37 countries in the Organization for Economic Co-operation and Development (OECD). The International Monetary Fund proposed last year that the Latin American country implement a fiscal reform to support spending and help its recovery.

Source: America Economia