The Mexican government announces 11 austerity measures to mitigate the effects of COVID-19 and oil prices

The Mexican government announces 11 austerity measures to mitigate the effects of COVID-19 and oil prices
López Obrador said the new austerity measures won’t apply to welfare programs or major projects - Photo: Diego Simón Sánchez/EL UNIVERSAL
English 22/04/2020 16:57 Pedro Villa y Caña y Alberto Morales Mexico City Actualizada 17:10

Leer en español

On April 22, President Andrés Manuel López Obrador announced 11 new austerity measures his administration will implement amid the economic crisis, the COVID-19 pandemic, and the collapse of oil prices

The Mexican President said his government will grant 3 million credits, create 2 million jobs, and protect 70% of Mexican families. Furthermore, López Obrador said the new austerity measures won’t apply to welfare programs or major projects such as the Maya Train and the Santa Lucía airport.

Moreover, high-ranking officials will take a 25% pay cut and will not receive a Christmas bonus but said no one will be fired from the federal administration.

Recommended: Mexican economy to contract by 6% in 2020, the World Bank forecasts

The presidential decree includes the following measures: 
 
1.    No workers will be fired but there will be no hirings. High-ranking officials will take a 25% pay cut and will not receive a Christmas bonus. 

2.    The federal government won’t spend 75% of its budget allocated to supplies. At least 10 Deputy Ministries will disappear but officials won’t be fired.

3.     Those in this situation will stay at home while still getting paid.

4.    Half of the government offices will remain closed, except for those who are essential. At this time, officials will be relocated so that the government stops paying for buildings, rent, and vehicles. 

5.    The government will postpone its expenses, except priority welfare programs that benefit the elderly, the disabled, farmers, students, children, as well as programs to build public universities, banks, a new airport, an oil refinery, rural roads, the Maya Train, among other projects and programs.

6.    The Finance Ministry will be able to use the necessary resources to cover payrolls, pensions, and public debt.

7.    The Health Ministry, the National Guard, and the Defense and Navy Ministry can use resources from trusts created by the Executive Branch.

8.    The Republican Austerity Law will be implemented rigorously. 

9.    Efficiency, honesty, and austerity will allow the federal government to increase the budget to strengthen welfare programs and major projects by MXN $622,556 million.

10.    The government will grant 3 million credits for the poor and middle class and create 2 million jobs. The President vowed not to increase gas prices, create new taxes, or acquire more debts.

11.    The austerity measures will apply to the federal government, including state-owned companies and public trusts. 

The decree will be enforced on April 22 and until December 31. 

Recommended: The world must get ready to face a dangerous economic recession

gm