Monday, June 24, 2024

AMLO sees risk of corruption in bank’s support for business

There is a risk that corruption will infiltrate the loan scheme announced by the Inter-American Development Bank (IDB) and the Mexican Business Council (CMN) to help businesses through the coronavirus crisis, President López Obrador said on Tuesday.

IDB Invest, the development bank’s private sector arm, and the CMN, an elite group made up of 60 of the largest businesses in the country, said in a joint statement on Sunday that the program will aim to provide loans worth US $12 billion to 30,000 small and medium-sized businesses.

Speaking at his morning news conference, López Obrador said that experience shows that top-down schemes designed to help business through tough times, boost economic growth and create jobs are invariably plagued by corruption.

“Those bailouts … are equivalent to corruption, synonymous with corruption,” he said.

López Obrador reiterated that he wasn’t opposed to the IDB Invest/CMN loan program as long as it doesn’t come at a cost to public finances, However, he stressed that the government will monitor it closely.

“What we don’t want and what we won’t allow is for these loans to become public debt if they are not [re]paid,” he said. “We can’t give preferential treatment to those who have economic means when there is so much poverty in Mexico.”

The president’s remarks came a day after he asserted that the Finance Ministry would not underwrite the loan scheme, as he he believed IDB Invest and the CMN had claimed.

CMN President Antonio del Valle said on Monday that López Obraor had misunderstood what the two entities said, asserting that the loan scheme will never make use of public resources even if borrowers fail to make their repayments.

“It’s inaccurate to say that the Finance Ministry is acting as a guarantor, … it’s only supporting [the scheme] as an IDB Invest shareholder,” he said.

“There is no loan guarantee, no resources from the government or the public sector; [public] debt won’t increase in any sense for this program, it’s strictly a private operation,” del Valle said.

IDB Invest and the CMN have called on local commercial banks, international investors and other development banks to participate in the scheme in which businesses will be offered loans “at very attractive rates.”

Tomás Bermúdez, Mexico representative for the IDB, said the scheme will “complement the measures” the federal government has taken to support small and medium-sized businesses amid the coronavirus crisis.

López Obrador has announced that his administration will provide 3 million loans to poor and middle-class Mexicans including small business owners.

But many business groups and analysts believe that the private sector needs more support to get through the sharp economic downturn caused by the measures to limit the spread of Covid-19, including the suspension of nonessential activities.

Source: Vanguardia (sp), El Universal (sp) 

Have something to say? Paid Subscribers get all access to make & read comments.
U.S. Treasury Secretary Janet Yellen announces the new sanctions against La Nueva Familia Michoacana, speaking at a podium

US announces new sanctions targeting members of La Nueva Familia Michoacana

U.S. officials said the sanctions target leaders, lieutenants and an assassin working for the criminal organization La Nueva Familia Michoacana.
A fisherman points out the bubbling "water eye" in the ocean off Cozumel Island, with a cruise ship and another fishing boat in the background.

Churning ‘water eye’ appears off coast of Cozumel Island in Quintana Roo

The phenomenon is a result of the Yucatán Peninsula's unusual geology.
A person pours water on his face under blazing sun

Heat-related death toll climbs to 155, more than doubling in 3 weeks

Tabasco and Veracruz account for nearly half of all heat-related fatalities in the country so far this year.