AFTER THE FIRST YEAR….

ImageMexico’s President Enrique Peña Nieto (EPN) used his first state-of-the-nation address to present the achievements of the government during the first few months of his mandate. He praised the members of parliament for their support and diligent approval of the reforms that his administration launched. He emphasised the importance of setting the basis to end the inertia and transform Mexico in the great nation that it is. Peña Nieto and his supporters believe that Mexico has the potential to improve in few years the quality of life of all Mexicans.

The Mexican President enounced the outcomes and progress in each of the five axes of the National Plan for Development 2013-2018 (launched at the beginning of his term in office): 1) Mexico in peace; 2) social inclusion; 3) education with quality; 4) economic prosperity; and 5) Mexico as a responsible global actor.  Firstly, he highlighted the decrease on the number of murders, the improved coordination between the law enforcement agencies and the reform of the judicial system. Then, Peña Nieto described the results of social programs, especially the National Crusade against Hunger, the expansion of Oportunidades and the addition of scholarships in the program and the inclusion of gender perspective in all government programs. In terms of education, the Mexican President affirmed that the education reform will produce better facilities, better teachers, better access to computers, internet and teaching technologies and improved facilities for students.

Moreover, he pointed out that the constitutional reforms proposed by his government aim to improve productivity, promote economic growth and create jobs. The current administration considers that it is necessary to lay the legal and institutional foundations that will support the country’s sustainable growth in following decades. In this regard, the private sector commended the government’s actions and noted that benefits from macroeconomic stability are already showing; for instance, Mexico climbed to the 7th position as recipient of foreign direct investment (FDI), only in the first semester of 2013 Mexico received USD$24 million on FDI. The chair of COPARMEX (Mexican Patron’s Confederation) indicated that even when the government has promoted larger efforts against organised crime, it is still necessary to offer more certainty to investors.

Great speculation emerged after the announcement of the energy reform. PEMEX (Petróleos Mexicanos, state-owned oil company) is a symbol of pride and any discussion around it touches the deepest fibres of Mexican nationalism, but the company has become so obsolete and inefficient that its production is constantly decreasing. Without private investment PEMEX is incapable to exploit the rich oil and gas reserves that the country owns. Foreign companies warmly welcomed the reform, since it represents great investment opportunities; for the US, especially, could mean less dependency on OPEC countries supply and therefore less leverage for the cartel. But in the domestic realm, private foreign investment has brought a big debate; detractors believe that it will put the nation’s wealth in the hands of imperialists interests and only very few will see the benefits. Cuauhtémoc Cárdenas (leader of leftist party PRD) and Andrés Manuel López Obrador (AMLO, leader of leftist movement MORENA) have separately called for massive public protests against the reform.

Additionally to the energy sector, Mexico needs to reform the tax system. This will not only decrease the burden on PEMEX, but also will bring sounder fiscal policies, transparency and greater competitiveness to private companies. Among OECD members, Mexico is the country with the smallest proportion of tax collection (it is equivalent to only 10% of GDP, while the average is 25%). Additionally, Peña Nieto announced that in brief his government will submit to Congress a proposal to reform the financial system, which will intend to make funding cheaper and more accessible for micro, small and medium enterprises. This set of structural reforms is designed to create the conditions for a more competitive, productive and dynamic economic environment that attracts larger sums of foreign investment and encourages the creation of more jobs.

Finally, EPN mentioned that Mexico has promoted closer and deeper bonds with its neighbours. With the US, the Mexican government established an integral agenda with the aim to create the most productive region of the world. In the southern border, Mexico finalised a free trade agreement (TLC Unico) with Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua and it is negotiating another one with Panama.  Although, Peña Nieto’s administration is promoting more exchanges with Asia-Pacifico and his government wants to encourage larger integration of the Pacific Alliance (Chile, Colombia, Mexico and Peru) and the TPP to take advantage of synergies across the Pacific, its closer neighbours are the main focus of its foreign policy.

Denise Dresser and Lorenzo Meyer, political analysts, commented that Peña Nieto had opened too many fronts with the series of constitutional reforms promoted in Congress. The analysts gave particular attention to the impact of the energy sector reform on PEMEX and CFE (state-owned enterprises for oil and electricity production and distribution), as well as, on the state revenue. It is still necessary to pass complementary bills and then to implement them all, which in reality will take quite a few years to produce results and to spill the benefits down to the masses. To sum up, Peña Nieto presented a large number of actions initiated by his government, but the results are still to be produced…. Will Peña Nieto’s have sufficient political leverage to achieve these objectives? Will the Pacto por Mexico coalition hold together for the next five years?  It seems that the honeymoon is over.

If you wish to consult the full state-of-the -nation document, please click here.

7 Comments

by | September 4, 2013 · 10:47 am

7 responses to “AFTER THE FIRST YEAR….

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