The plan presented by President López Obrador on Sunday to mitigate the economic impact of the coronavirus pandemic is “disappointing,” “incomplete” and its consequences could be “grave,” according to prominent business groups.
The Business Coordinating Council (CCE) said in a statement that it welcomed some of the measures announced by López Obrador, such as the increase in public spending, the provision of additional loans to small businesses and individuals and the instruction to tax authorities to promptly issue tax refunds, but asserted that the plan doesn’t go far enough.
“Unfortunately, we think that it is an incomplete response considering the great size of the crisis we face,” the business group said.
The CCE, an umbrella organization that brings together 12 groups including the Mexican Employers Federation (Coparmex) and the Mexican Business Council, expressed regret that the government hasn’t taken into account proposals it made to protect the jobs of 36 million people “through immediate actions to support the survival of small and medium-sized businesses.
“We didn’t ask for a reduction in taxes or privileges or concessions. We’ve always made workers, their families and the country our priority. Our proposals have not yet been taken into account,” the statement said.
The CCE last month urged the federal government to allow greater flexibility in the payment of taxes, asserting that all individuals and businesses should be allowed to defer their tax obligations for a period of six months.
“Our objective is to protect employment, salaries and incomes of families, lay the groundwork for an immediate recovery, avoid the liquidity crisis becoming a solvency crisis,” the group said.
“The Covid-19 crisis obliges us to unite once again. It’s time for proposals and agreements. Good judgement is essential in difficult times. … We all expect a statesman to show us his wisdom … and to act. … In this time of crisis, postponing decisions is a bad decision in itself. Every day lost results in greater harm for Mexican families.”
For his part, Coparmex president Gustavo de Hoyos Walther said that while the public health crisis might be “fleeting,” as López Obrador claims, the economic plan announced by the president will likely result in economic pain throughout his six-year period in office.
The plan has “absolutely nothing” of value apart from the commitment for the prompt payment of tax refunds owed to businesses and individuals, de Hoyos said.
In a video message posted to social media, he criticized the economic plan for not providing more support for companies.
“If the government supports companies, it will actually be supporting families,” de Hoyos said. “President, don’t turn your back on those who give life and employment to Mexico. Assume the character of a head of state, who places the highest interests of the nation above his personal political project.”
José Manuel López Campos, president of the Confederation of Chambers of Commerce, Services and Tourism, also criticized the plan for not supporting larger businesses.
“Without support for companies, [tax] collection will decrease, there will be dismissals and growth will be diminished in the future,” he said.
López Campos also charged that the support for small businesses in the form of low-interest or interest-free loans will be insufficient to ensure that all or most of them survive.
The “temporary crisis”of which López Obrador speaks could become “permanent for thousands of micro, small and medium-sized businesses,” he said.
Enoch Castellanos, president of the National Chamber for Industrial Transformation (Canacintra), said that the plan orients Mexico in a “gloomy direction” because it has nothing of substance that will help the economy.
“I think it’s disappointing, he basically didn’t say anything,” he said.
Castellanos also charged that figures cited by the president in his address, such as the pledge to create 2 million jobs in nine months, are not grounded in reality.
Despite the government’s lack of support for business, the Canacintra chief said on Twitter that the members of the business group he leads remain “determined to maintain employment, [keep paying] salaries and reactivate the economy.”
Francisco Cervantes, president of the Confederation of Industrial Chambers, was also critical of the economic plan, asserting on Twitter “it’s not what employers were hoping for not what they need.”
The consequences for the economy, “could be grave,” he added, reinforcing the view that Mexico is headed for a significant economic contraction in 2020.
Some financial analysts also joined the chorus of criticism.
Alberto Ramos, chief Latin America economist at Goldman Sachs, said that federal authorities “appear to be underestimating the economic impact of the pandemic,” charging that there is a need for “more profound” changes to tax policy to support businesses amid the coronavirus crisis.
Among the sectors hardest hit by the Covid-19 outbreak – there were more than 2,000 confirmed cases in Mexico as of Sunday and almost 100 deaths – and the measures put in place to contain its spread are tourism, including hotels and airlines, restaurants, entertainment and retail.