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By KELIN DILLON

According to the International Monetary Fund’s (IMF) External Sector Report, Mexico drastically needs to reform its fiscal practices and implement increased monetary support to its inhabitants if it wants to fully recover from the economic effects of covid-19.

More domestic fiscal support is needed in the short term to ease the tensions of the pandemic, reduce scars and facilitate recovery,” read the IMF’s statement. “The firm implementation of structural reforms to generate more solid investments would help to reduce the savings-investment balance and, therefore, promote an external position closer to the level implied by medium-term fundamentals and desirable policies.”

The organization recommended a restructuring of tax policy and making a comprehensive plan to create solid long-term fiscal growth throughout the country, including expanding further into the economies of powerful neighboring countries like the United States. 

Likewise, the report noted the weakening rate of foreign investment into Mexico and the potential ramifications that could have, encouraging the nation to once again make itself attractive to investors for a much-needed fiscal boost.

“Mexico urgently needs to reactivate public and private investment in order to recover as a country in economic growth and not just register a rebound,” said Jorge Sánchez Tello, director of Applied Research at the Foundation for Financial Studies (Fundef). “It is important to collect more taxes, but without the need for fiscal terrorism. Mexico has to give incentives to companies so that they can create more formal jobs in the country.” 

The IMF previously announced it had approved an unprecedented $650 billion for Special Drawing Rights (SDR) to help with the world’s liquidity during the bounceback from covid-19.

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