Mexico's economic growth will be tied to the creation of a vaccine against COVID-19

The Mexican government has unveiled its 2021 Budget . The new plan proposes increasing the budget for areas such as health, security, and tourism.

Amid the COVID-19 pandemic and the economic crisis, Mexico’s Finance Ministry proposed a budget increase for the IMSS, ISSSTE, and Health Ministry, so that the health system overcomes staff shortages and the lack of medical equipment.

According to the 2021 Budget, the IMSS would receive MXN 902,000 million in 2021; the ISSSTE would receive MXN 374,000 million, and the Health Ministry would receive MXN 145,000 million.

Meanwhile, the National Defense Ministry (SEDENA) would also be up for a budget increase. The Finance Ministry increased its budget to MXN 113,000 million because the ministry’s role includes fighting insecurity, aiding the Security Ministry, and helping in the construction of the Metropolitan Airport System.

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On the other hand, the Tourism Ministry (Sectur) would receive MXN 39,000 million in 2021, in contrast with the MXN 5,000 million budget received in 2020. However, it would allocate MXN 36,000 million to the construction of the Mayan Train and the rehabilitation of beaches.

The 2021 Budget would also benefit autonomous bodies. The National Electoral System would receive a higher budget, MXN 28,000 million, in 2021 as it will organize several elections throughout the country

State-owned companies would also perceive an increase. Despite historical losses and declining oil prices, Pemex would receive MXN 545,000 million. However, the Federal Electricity Commission (CFE) would suffer a budget cut next year.

Finance minister Arturo Herrera said the 2021 Budget does not include increasing taxes or the creation of new taxes. Herrera added economic policies had to adapt and evolve amid the pandemic.

The 2021 Budget also includes a 17% budget cut for the Executive Branch. In contrast, the budget for public universities will not decrease.

The Labor Ministry, Finance Ministry, and the INEGI would also register major budget cuts.

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Welfare programs

Just like it did in 2020, the federal government is prioritizing welfare programs . In total, the government will allocate MXN 439,669 million to 19 social programs amid at helping vulnerable sectors.

The Pensions for Elderly People Program will receive MXN 135,000 million. The Finance Ministry will also strengthen social programs aimed at students and disabled people.

Minister Arturo Herrera the federal government will focus on helping the less fortunate, who were also affected by the COVID-19 pandemic. Therefore, the 20210 Budget will allocate more resources for pensions, scholarships, small loans, and financial aid for farmers.

Economic recovery

The 2021 Budget calculates a 4.6% economic growth for next year. However, the Finance Ministry claims the economic growth could be higher next year; nevertheless, it will depend on the existence of vaccines against SARS-CoV-2.

The forecast is much more optimistic than the 2.95% forecast calculated by experts. Inflation was set at 3%. While authorities expect the GDP to register a -8% fall. The Finance Ministry calculates the interest rate at 4% and sets the USD price at MXN 21.90 per dollar.

President López Obrador reacts

President Andrés Manuel López Obrador said the 2021 Budget aims to strengthen society’s needs, especially regarding health, security, and projects that boost the economic recovery.

In a letter sent to Dulce María Sauri, the head of the lower chamber, the President said the 2021 Budget will reinforce welfare programs, especially the budget allocated to help marginalized communities through three specific measures:

1. Hiring more health care workers and acquiring more medical equipment

2. Strengthening welfare programs and infrastructure projects

3. The launch of economic measures to protect the families’ economies and financial support for small-sized enterprises.

In his letter, López Obrador emphasizes his commitment to implement Republican austerity, and administrating resources with honesty and transparency.

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