President-elect Claudia Sheinbaum has endorsed a set of economic commitments outlined by Finance Minister Rogelio Ramírez de la O in an attempt to calm markets after the Mexican peso and the Mexican Stock Exchange (BMV) lost ground following the ruling Morena party’s decisive win in elections on Sunday.
Sheinbaum, who will take office on Oct. 1, said on social media on Tuesday that she had met with Ramírez — who will stay on as finance minister when the new president takes office — and that they “ratified the economic line” he set out.
In a statement on Tuesday, the 75-year-old economist said that as finance minister he would ensure:
- The reduction of public debt to levels compatible with a sustainable debt-to-GDP ratio “in the medium term.”
- That “all communication with investors and rating agencies” is updated to “confirm our priorities: macroeconomic stability, fiscal prudence and the viability of our fiscal objectives.”
- The strengthening of collaboration with (the heavily-indebted) state oil company Pemex, “taking advantage of support in Congress to optimize the good use of public resources.”
- The confirmation to international organizations and investors that “our project is based on financial discipline, respecting the autonomy of the Bank of Mexico, adherence to the rule of law and facilitating private national and foreign investment.”
Ramírez, finance minister since 2021, also spoke to investors and analysts on Tuesday in what the Financial Times described as a “hastily scheduled call.”
During a two-minute call in which he emphasized the commitments listed above, he didn’t address concerns over proposed constitutional reforms that the Morena party and its allies could approve in Congress thanks to the large majorities they won in the Chamber of Deputies and the Senate in elections on Sunday.
The Morena-led coalition easily won a two-thirds majority in the lower house of Congress and is expected to get close to achieving a super majority in the Senate as well. It could thus approve constitutional reforms that were proposed by President Andrés Manuel López Obrador and which are supported by Sheinbaum with the support of just a few opposition senators.
Submitted to Congress in February, those proposals include ones to allow citizens to directly elect Supreme Court justices and other judges; eliminate numerous autonomous government agencies; incorporate the National Guard into the military; and overhaul the pension system.
Concerns over the likelihood that Morena will indeed be able to approve constitutional reforms once the recently-elected lawmakers assume their positions in September caused both the peso and the BMV to take a post-election tumble.
The peso depreciated again on Tuesday, but appreciated on Wednesday to trade at 17.56 to the US dollar shortly after midday Mexico City time. The BMV’s benchmark index rose more than 3% on Tuesday after falling over 6% on Monday.
Aaron Gifford, a sovereign credit analyst at investment management firm T Rowe Price, told the Financial Times that Ramírez’s call with investors had not allayed concerns about the make-up of Mexico’s next Congress.
“It seems like we’ll have to wait for more details around the transition plan, especially given fears of AMLO pushing through some reforms during the month that he overlaps with the new congress,” he said.
For its part, the Association of Mexican Banks said in a statement on Tuesday that the announcement that Ramírez will remain finance minister after Oct. 1 sends a “powerful message” to the global financial community and international markets that “Mexico will continue with a solid and disciplined economic and financial policy oriented toward strengthening economic growth.”
Sheinbaum made that announcement in a video message on Monday, and pledged that her government would “act with dialogue, harmony and a lot of responsibility.”
With reports from Milenio, El Economista and The Financial Times
A slight drop in the peso was predicted 1 year ago. Post election rate was predicted to go to 18.5-1 by some and 17.5 to 18 by most. 17.85 is right in line with were the rate should be. In fact 18-1 is an ideal rate for investment and expansion, not to mention remittance.
The whole process of elections in Mexico is a sham and an embarrassment of how elections are conducted ..puppet administrators. Kidnappings, intimidations, murder of political party candidates, bribery schemes…so black eye for AMLO ,Sheinbaum anyone associated with their puppet party. It’s no wonder world leaders wants NOTHING to do with investments in Mexico !. No trust or credibility because of this Socialist government..
If the extreme measures as proposed by AMLO (and rejected as unconstitutional) are forced through then Mexico becomes a laughing stock and deteriorates economically at a severe cost to the working class and poor who basically rely on investment for jobs
Thanks T.
And I am so glad learned political and economic experts from Mexico or other countries took time to provide erudite commentary on this article June 6.
It couldn’t have been Americans. Heaven forbid ex-pats would condemn the actions of a host country’s government. Why, that would be like legal Mexican aliens saying the U.S. sucks. Or lock the felon up. What a laughing stock. It’s immediate grounds for kicking them out of the U.S. or worse!
Seriously, we are guests in Mexico. Leave your rhetoric north of the border.
Psst no one invited me here. I am a permanent resident not a guest. As a foreign resident I tend to keep public criticism on politics private. I am a journalist and lived here 20 years,
Nice Bill. You are doing an honorbable thing as a foreign resident and journalist.
I agree with you wholeheartedly
An interesting conversation. I am currently north of the border, but am a permanent resident also. While “in country” I subscribed to and support Bill’s philosophy but my question to all of you now is: Is this forum, basically an expat forum and is it “politically correct” to air ones opinions here? My wife is a Mexican national and we have many interesting conversations about Mexico’s democracy, past and present. It would be interesting to have a wider, polite discussion. And to Stegowhite, no it would not be grounds for kicking anyone out…..free speech is a pillar of American Democracy.