Urzúa Resigns as Head of Finance Head, Herrera Pinch Hits

Former Mexican Finance Secretary Carlos Urzúa. Photo: nación123


It was a political rock rattle and roll in the Mexican government Tuesday, July 9, when, over the course of just one hour one Treasury Secretary resigned and a new one was appointed by President Andrés Manuel López Obrador (AMLO).

To offer a proper sequence of events, allow me to start from the beginning of the series of events, which, without a doubt, was when the letter apparently handed personally by now-former Treasury Secretary Carlos Urzúa to AMLO.

Here’s a verbatim translation of that letter:

To Andrés Manuel López Obrador

Constitutional president of the United States of Mexico

Dear President López Obrador:

I’d first like to express you my profound gratitude for having given me the opportunity to serve Mexico during this first year of your administration. Second, I am communicating to you that I have decided to resign, effective immediately, from my appointment as secretary of Hacienda (Treasury) and Public Credit.

There were many discrepancies on economic matters. Some of them were because, in this administration’s public policy, decisions have been made without sufficient backups. I am convinced that all economic policies must be carried out based on solid evidence, considering the diverse consequences these might have and free of any extremism, be it from the right or the left. During my tenure, however, these convictions found no echo.

Adding to this, the impositions by officials who have no knowledge of public finances were unacceptable. This was motivated by influential persons within the current government who had an obvious conflict of interest.

Due to the abovementioned motives, I see myself sidelined and forced to resign my position. Thank you very much for the privilege of having allowed me to serve Mexico.

Yours truly

Carlos Manuel Urzúa Macías

In less than an hour, Urzúa’s resignation had been accepted and AMLO proceeded immediately to introduce then-Treasury Undersecretary Arturo Herrera Gutiérrez as the new head of Hacienda. Both Urzúa and Herrera are economists and worked for AMLO when he was mayor of Mexico City, from 2000 to 2005. Both also managing the city’s treasury. Both came in with AMLO’s presidential team.

During his daily morning press conference on Wednesday, July 10, AMLO explained what Urzúa had referred to as “impositions by officials who have no knowledge of public finances.”

AMLO, in fact, admitted “there were differences,” not just between Urzúa and other administration officials, but also directly between Urzúa and the president.

There were indeed big discrepancies between Urzúa and AMLO, particularly over the National Development Plan 2019-2024. For starters, both presented different proposals, but in the end, it was the president’s vision that prevailed.

“I wrote the plan myself,” AMLO said. That was a major difference that was already evdent in two different styles of handling the economy.

Urzúa, AMLO admitted, also had differences with the president’s Chief of Staff Alfonso Romo, a now-retired Forbes-list millionaire.

“There were discrepancies over the (government’s) Development Banking System,” AMLO said. “I had asked Romo to help coordinate so that it would work out well, but Urzúa was not in agreement. There were many noteworthy differences between these two.”

But Urzúa’s differences had not been just with Romo and the president, but also with other top officials, such as the Tax Collection Director for the Treasury (and the new secretary’s wife) Margarita Ríos-Farjat, as well as former-Mexican Social Security Institute (IMSS) director Germán Martínez, who bitterly complained last May 21 about confrontations with Urzua. In a letter that was also made public, Martínez denounced Urzúa’s  decision to not release already-budgeted funds for the nearly bankrupt IMSS.

AMLO explained that Urzúa was applying pretty much policies that were stretching from the previous administration of President Enrique Peña Nieto, and that under his watch, which he touts as the Fourth Transformation (4T), things were different.

These difference “led to discrepancies and even to confrontations inside the inner circle of the group (AMLO leads),” the president said. “But what’s important is that the government continues to march forward. We best get used to and understand the context and circumstances of changes, which will keep coming and which may very well include further resignations.”

There is no doubt that Urzúa’s “tightfisted regime” over the budget produced results. Urzúa increased tax collection galore, bringing the government much-needed revenues. But what has not been seen as just was the fact that Urzúa did not shell out 140 billion pesos that had already been allotted for programmed expenditures. Still, the good news is that AMLO’s government now has an unexpected kitty of reserves.

As for the new appointe.e Eduardo Herrera Gutiérrez, he’s an economics graduate from the Metropolitan Autonomous University (UAM), has a masters from the Colegio de México (Colmex), and is about to finish his doctorate at NYU.

During AMLO’s tenure as Mexico City mayor, Herrera also replaced Urzúa back then and later worked for the Public Service Unit and Development for Latin America in the World Bank.

However, Herrera has recently been in the news for claiming that one of AMLO’s pet projects, the Dos Bocas Refinery to be built in Tabasco, had a lot of feasibility problems. AMLO retorted that he had different info regarding Dos Bocas. There were minor rifts between the two, which the Mexican conservative “fifí” press played way out of proportion.

As background info on what AMLO wants from a treasury secretary, he often points to Antonio Ortiz Mena, who served during two separate administrations (that of Presidents Adolfo López Mateos and that of President Gustavo Díaz Ordáz, from 1958 to 1970) for keeping a full-wind sailing economy with a 6 percent GDP annual growth, low inflation, high employment numbers, decent wages, a solid peso and a sound public debt.

This wishful thinking sounds idealistic under the current circumstances (both national and international), but it’s not a bad goal to shoot for

For now, let’s see how new Hacienda Secretary Herrera Gutiérrez drives this old screeching economy.

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