Mexican Congress ratifies new Treasury Secretary promising macroeconomic stability

RIO DE JANEIRO, BRAZIL – The Mexican Chamber of Deputies ratified the new Secretary of Finance, Rogelio Ramírez de la O, who promised macroeconomic stability and to “consolidate the transformation” of President Andrés Manuel López Obrador.”

Ramírez de la O replaces Arturo Herrera, appointed by López Obrador as the new governor of the Bank of Mexico (Banxico) as of January 2022.

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“During my tenure as head of the Ministry of Finance, I will maintain the main pillars that define this Administration economically, including the State’s social vocation, macroeconomic stability (and) republican austerity,” promised the new minister.

Ramírez de la O will assume the Ministry of Finance and Public Credit (SHCP) after Mexico’s economy’s historic 8.2% contraction in 2020, when debt as a proportion of GDP exceeded 52%.

The economist shares the orthodox profile of Herrera, who arrived at the Ministry of July 2019 after the resignation of then-Secretary Carlos Urzúa, who resigned due to “economic discrepancies” with López Obrador.

“The first three years of the present Administration have not yet concluded, and we are already being presented with the third Secretary of Finance and Public Credit”, reproached Deputy Antonio Ortega, of the opposition Party of the Democratic Revolution (PRD).

The new Secretary faced criticism for the government’s austerity policy, as opposition deputies questioned that the package to face the economic effects of the pandemic was 0.7% of GDP, one of the lowest levels in America.

“The Ministry of Finance has an important role in the articulation of the economic project of this government, the austerity policy and the elimination of superfluous expenses in the government have made public expenditure more efficient and focused,” justified Ramírez de la O.

The new cabinet member highlighted the 6% GDP growth forecast for 2021, anchored on foreign trade and vaccination.

The government has paid 28 billion pesos (US$1.4 billion) out of a total of 50 billion pesos (US$2.5 billion) committed for the drugs, of which it has received 86 million and administered 67 million, he detailed.

He also boasted that up to June, 95% of the jobs lost due to the pandemic had been recovered, that is, about 12.3 million combined formal and informal jobs.

He also mentioned that tax revenues grew by 0.8% in 2020 despite the economic contraction.

“The president is firm in his stance of not increasing tax rates or creating new taxes, we are convinced that we have the margin to give this certainty and at the same time accommodate spending needs, always with an austerity criterion”, he indicated.

Ramírez de la O advanced that the 2022 Economic Package to be presented on September 1, along with next year’s budget, will maintain austerity policy and debt control.

“We are not contemplating major budget changes, we are not contemplating cuts to programs,” he promised.