Mexico unveils economic plan to tackle the economic crisis generated by COVID-19

06/04/2020
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15:43
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Mexico unveils economic plan to tackle the economic crisis generated by COVID-19
In recent weeks, the Mexican pesos devaluated and oil prices declined worldwide - Photo: Carlos Zepeda/EL UNIVERSAL

Mexico unveils economic plan to tackle the economic crisis generated by COVID-19

06/04/2020
15:43
Mexico City
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Besides the struggling economy, Mexico went into a mild recession in 2019

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Amid the economic crisis caused by COVID-19 and the collapse of oil prices, President Andrés Manuel López Obrador unveiled an economic recovery program Emerging Program for the Wellbeing and Jobs; according to the President, this plan does not follow the scheme imposed by neoliberal regimes and instead focuses on public investment and social spending in favor of the poor

According to President López Obrador, the neoliberal model “deepened inequality and promoted corruption.”

During a state of the union address on Sunday, López Obrador said the economic crisis is transitory and that the economic recovery will depend on social and economic development, as well as new jobs, honesty, and Republican austerity

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The President’s economic plan includes:

1.    The creation of 2 million jobs in 9 months
2.    Personal credits and mortgages
3.    Maintain the stimulus on gas prices
4.    The immediate reimbursement of VAT to taxpayers
5.    Projects such as the Maya Train, the Santa Lucía airport, and the Dos Bocas refinery will carry on
6.    The President and other high-ranking officials will take pay cuts

However, this program does not include 

1.    Contracyclical measures
2.    Credit lines
3.    Bailouts for large companies and banks
4.    Turning private debts into public debts
5.    Tax benefits
6.    New taxes or a sudden increase in gas prices
7.    More public debts
8.    Firing government employees

How will the federal government fund the program?

1.    Savings from the Stabilization Funds
2.    Resources from public trusts
3.    The development bank
4.    The enforcement of austerity policies 

Recommended: COVID-19: Mexico faces an uncertain future

Moreover, high-ranking officials and the President will take pay cuts and will not receive a Christmas bonus in 2020. Government officials will also decrease their travel expenses, advertisement, and other expenses. 

Additionally, next week, the federal government and business leaders will announce a public, private, and social investment plan worth MXN $339,000 million. 

Despite the focus on the poor and vulnerable population, López Obrador recognized banks for granting a 6-month extension for the payment of credits and interests, a policy aimed at small companies, as well as for granting credits to families.

Recommended: The business sector has a “plan b” to face the economic crisis

After the plan was unveiled, some business leaders rejected and criticized the program:

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