Mexican Treasury Secretary Arturo Herrera. Photo: Google.com

By RICARDO CASTILLO

It is that time of the year in Mexico when the Treasury Secretariat sends what is known as “the economic package” for the year to come. On Tuesday, Sept. 8, Treasury Secretary Arturo Herrera visited the Chamber of Deputies to hand deliver “the package” to new Deputies’ President Dulce María Sauri Riancho.

Legally known as the “Law of Income, Project of a Budget for Expenditures of the Federation, Fiscal Miscellany and Criteria for Economic Policy,” Herrera presented in on behalf of President Andrés Manuel López Obrador (AMLO). The yearly plan is known as “the budget” for short.

For those not familiar with the yearly budget course through Congress, the law demands it be delivered no later than Sept. 9 for study and amendments by the Chamber of Deputies. In turn, the deputies will turn the document over to the Senate in October and the Senate will vote on it. The budget will have to be approved no later than Nov. 15, and will go into effect on Dec. 1.

Herrera attended AMLO’s daily morning press conference at the National Palace to explain the “unusual” nature of this year’s 6.2 trillion peso budget ($0.3 trillion dollars) since it is intended to solve two economic problems: the one the administration inherited from previous administrations – including a 11 trillion peso debt that sucks up one-fourth of the budget in interests – and the uncharted one caused by the covid-19 pandemic.

Herrera forecast that there would be a 4.6 percent growth in gross domestic product (GDP) next year, even if the pandemic lasts longer than expected.

“For as long as there is no vaccine, the economy will continue to operate under most unusual conditions,” he said.

Herrera defended his projected 4.6 percent GDP growth forecast claiming: “In reality, it is not a highly optimist estimate. In fact, if we take into account that fact that there will be a drop (this year) of minus 8.8 of the economy at large, a 4.6 percent growth rate does not even place us at the growth levels of 2019. Ours is a responsible estimate.”

In outlining the 6.2 trillion peso budget, Herrera said that 5 trillion are “obligatory” expenses. He divided them among the different branches of government, including 1.86 trillion for states and municipalities, the Mexican Social Security Institute, the Social Services for State Workers Institute and state-owned enterprises such as oil company Petróleos Mexicanos (Pemex) and the Federal Electricity Commission (CFE).

Much of that money will go to retirement pensions and AMLO’s social programs, as well as the Tren Maya tourist train, the Dos Bocas refinery construction and the Tehuantepec Isthmus industrial development project – AMLO’s trademark projects – are included in the overall “investments” section of the budget.

Herrera underscored that the “historical balance” of the foreign debt will drop from 54.7 down to 53.7 percent of the GDP.

Among expected income for 2021 is the sale of oil, tentatively quoted at $42 per barrel, he said. Herrera also said there in no intention of the government raising taxes.

He said that the budget contains measure to improve tax collecting and shut down loopholes for tax evasion. Delinquent companies will be offered the chance to pay back taxes in installments.

Over all, the budget contains moves to cap the pandemic and meet the unexpected expenditures of the inevitable upcoming of the mass vaccination for all Mexicans.

The budget, however, remains to be reviewed and approved by both houses of Congress.

…Sept. 10, 2020

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