By RICARDO CASTILLO
Budget Change Controversy
Harsh times demand harsh measures, and this week Mexican President Andrés Manuel López Obrador (AMLO) sent a bill to the Chamber of Deputies proposing to rearrange the government’s budget to meet the inevitable health and financial crisis looming for the nation.
AMLO’s adversaries, through the non-governmental organization México Evalúa (Evaluates) has claimed that the bill “eliminates the revision on the part of the Chamber of Deputies to review changes in expenditures given the drop in government income as expected this year. The organizations represented (by México Evalúa) consider this intent as inappropriate because it infringes the division of powers and the democratic nature of the budget.”
The majority speaker at the Chamber of Deputies, Mario Delgado, announced on Wednesday, April 29, that AMLO had decided to postpone the proposed changes to Mexico’s budget laws, not because of the pressure stemming from minority parties, but because he does not want to do what all his predecessors had done, modify expenditures without notifying the Chamber of Deputies of the changes.
Delgado also said that the opponents to changes are claiming that the crisis is already here, when in this columnists eyes it isn’t since the Mexican Treasury just reported that tax income for the first quarter of 2020 was higher than in 2019. Moreover, any budget moves will be determined by the economic gauging made both by the central bank Banco de México and the official economics pollster National Institute for Geography and Statistics (Inegi). Also, the full cosequence of the covid-19 pandemic has not been properly measured as it is still underway.
The Chamber of Deputies will have to vote on the budget revamping bill at the latest by May 15.
EU-Mexico Free Trade Treaty
Mexico’s Economy Secretariat announced this week that after four years of talks, the nation and the European Union have concluded negotiations to upgrade their commercial treaty.
The key issue that had held negotiations up for so long was finally settled after Mexico proposed that for the procurements chapter of the treaty, purchases would be carried out at the sub-federal level.
The proposal was accepted by the EU Trade Commissioner Phil Hogan as well as Mexico’s Economy Secretary Graciela Márquez. “Sub-federal” means that each of the states of Mexico can source from EU nations without direct federal government intervention.
The Free Trade Treaty between the European Union and Mexico will be ready for signing once it gets translated into all of the EU’s 27 different languages.
Combined bilateral trade currently amounts to 180 billion euros.
Mexico is now in negotiations to sign a separate trade deal with Great Britain.
Going After Tax Evaders
Mexico’s fiscal attorney general, Carlos Romero Aranda, announced that he has received the accounting files from several companies that are currently under suspicion of having evaded more than 50 billion pesos in taxes.
“We’re going to hit them hard,” Romero Aranda said.
He added that he and his team of accountants and lawyers are not merely after the evaded taxes, but “we’re going to go against the lawyers of accountants who carried out the fiscal planning that led to this tax defrauding.”
Romero Aranda said the Fiscal Code of the Federation allows authorities to go after both company executives and outsourcing offices that helped commit the crime.
“This a novel issue in the code,” he said.
Romero Aranda said his team is acting on orders and reporting directly to President López Obrador.
“We can no longer allow companies to continue defrauding the federal tax collection offices,” Romero Aranda warned.
Not Like Other Nations
Mexican Treasury Secretary Arturo Herrera acknowledged that “Mexico does not have the tax collection window that some other nations do, which have announced hefty covid-19 crisis support programs.”
“We do not wield the maneuvering margins for an in-depth fiscal stimulus program, such as the ones launched in the United States, Canada, Germany and Spain,” he said.
He pointed out that the United States now has no interest rates, while Canada’s is at 0.25 percent.
In Mexico, the interest rate is at 6 percent.
Tourism Hit the Hardest
Mexico’s usually thriving tourism trade has been the worst-hit victim of the covid-19 pandemic, with losses up to $10 billion in April alone, the National Association of Government Tourism Secretaries (Asetur) said.
Even worse is the uncertainty of how long it will take to regain lost ground nor for hospitality companies to get back on track as what can be foreseen is that traveling and vacationing habits may change on an international scale.
Loan Money at Hand
As of Monday, May 4, the Mexican government will begin to hand out 3 million “micro-credits” of 25,000 pesos each.
Mexican Social Security Institute (IMSS) director Zoé Robledo announced that 645,000 small business owners meet the profile to get the mini-loan because they did not lay off any employees and kept paying their wages, in spite of the social-distancing order from the government.
The paper work to get the case was simplified as the only commitment borrowers are making is that they will start paying back in small installments as of August.
Auto Industry Restart
AMLO said he will announce “soon” — perhaps even next week — the restart of Mexico’s auto industry to link up just in time with factories in the United States and Canada.
Economy Secretary Graciela Márquez said she’s in talks with U.S. and Canadian authorities to approve the reopening of the plants, “without putting at risk the health of workers.”
…May 1, 2020