By KELIN DILLON
Mexico’s Secretariat of Finance and Public Credit (SHCP) announced the country has been placed on the U.S. Department of Treasury’s monitoring list for financial irregularities and currency practices based on methodology studying the two countries’ bilateral trade in 2020, Mexico’s first appearance on this list.
“Mexico met two of the three criteria in this report, having a material current account surplus and a significant bilateral trade surplus with the United States,” read the report.
“Mexico’s costly support to increase the market dominance of loss-making state firms drains public resources for essential spending and marginalizes investment in renewable energy that would reduce user costs and free fiscal space for more productive investment and social protection,” continued the U.S. Treasuries report, acknowledging the international effects of Mexican President Andrés Manuel López Obrador’s (AMLO) controversial energy reform.
“Insofar as net energy exports from the United States to Mexico may decline as a result of Mexico’s policy objective of greater fossil fuel independence, Mexico’s trade surplus with the United States may increase.”
The report also mentioned Mexico’s delayed response to the covid-19 pandemic increased the country’s poverty rate by up to 8 percent, and estimated that the country’s per capita income will probably remain below pre-pandemic levels until the second half of the decade.
Mexico was reportedly added to the financial watch list for its account balance having “swung into historic surplus in 2020,” the first time the country had seen an account surplus with the United States since 1987.
However, the U.S. Treasury also gave Mexico some praise for its financial tactics, saying “the country’s prudent, inflation-targeting monetary policy and flexible exchange rate regime remain crucial pillars of the macroeconomic framework for Mexico’s resilience to shocks.”
“The Treasury is working tirelessly to address efforts by foreign economies to artificially manipulate their currency values that put American workers at an unfair disadvantage,” said the U.S. Department of Treasury.
For its part, the SHCP said the placement on the list would only be temporary, and the country would likely be removed from watch following the readjustment of trade between the two nations, as the Mexican economy recovers from the effects of the covid-19 pandemic.
…April 19, 2021