News
Chief of staff Romo. Chief of staff Romo.

Government to make more spending cuts as it seeks to avoid deficit

From republican austerity to 'Franciscan poverty'

The federal government is making more spending cuts in order to avoid a fiscal deficit, the president’s chief of staff said yesterday.

Speaking at an event at the American Chamber of Commerce in Mexico City, Alfonso Romo said that President López Obrador has asked for further reductions to spending by government departments.

“Believe the president that we’re going to go from republican austerity to Franciscan poverty, don’t doubt that, more cuts have been asked for in the past two weeks,” Romo said.

However, the chief of staff indicated that he will defend departments from excessive spending reductions because they are already feeling the pain of cuts made in the federal budget.

“The problem with cutting [spending] by too much is that the secretariats are overwhelmed, that’s why I defend them, a large part of their budgets and people were [already] removed,” Romo said.

“. . . We don’t want to paralyze [the work of the secretariats] but there is a determination not to fall into a fiscal deficit . . .” he added.

Presenting its first budget in December, the government pledged “absolute commitment to fiscal and financial discipline” and a surplus of 1% of GDP in 2019 without introducing any new taxes.

Luis Foncerrada, an economic adviser at the American Chamber of Commerce, applauded the government for signaling its intent to ensure there is a surplus this year, contending that spending cuts are necessary because economic growth in 2019 is forecast by some analysts to fall short of 2%.

“Given that we’re not going to grow as was imagined, we’re not going to have the revenue that was budgeted for . . . a responsible government has to reduce spending,” he said.

Sunny Villa, director of public spending at the Budget and Economics Research Center (CIEP), a think tank, said it is difficult to know what impact the government cuts will have because it is not yet clear where the cuts will be made.

López Obrador has made cutting government spending a priority for his administration.

The wages of lawmakers and other government officials, including the president, have been reduced, 15 secretariats saw their funding cut in the 2019 economic package, the Tourism Promotion Council (CPTM) has been disbanded and funding for the Magical Towns program was cancelled.

Other austerity measures have included an auction to sell government vehicles, the conversion of the official presidential residence into a cultural center and the disbandment of the president’s personal security contingent.

Source: El Financiero (sp) 

Reader forum