Tuesday, June 18, 2024

Private sector agrees to invest additional US $35 billion to fuel growth

The federal government and a leading business group have reached an agreement to increase combined public and private investment to 25% of GDP from the current level of just over 20%.

The pact with the influential Business Coordinating Council (CCE) includes a commitment from the private sector to invest an additional US $35 billion in Mexico during the next two years.

According to the agreement, annual private sector investment currently represents 17.5% of GDP while government investment accounts for 2.8%.

Under the terms of the new deal, the former will increase its investment spending to 20% of GDP and the latter to 5%.

Investment in the energy sector, including renewable energy projects, is considered crucial to achieving the 25% of GDP goal.

Spending on infrastructure – including projects to build or upgrade highways, ports, bridges, railways and airports – health, education and development in the south and southeast is also prioritized in the new public-private agreement.

At a signing ceremony yesterday, President López Obrador said that members of the Mexican Business Council (CMN) – an elite group made up of 60 of the largest businesses in the country – will this year invest around US $32 billion, an amount he described as “significant” and which will “create jobs and boost economic growth.”

However, the president said that to achieve average 4% economic growth during his six-year term in office – as he has promised – total investment needs to increase to 25% of GDP.

CMN president Antonio del Valle agreed with the president’s assessment.

López Obrador thanked the business sector for their confidence in the economy and his government and said that the increased investment commitment will ensure that there is well-being and peace.

“. . .With this agreement . . . the country’s private sector will contribute to investment in every branch of the economy, in the farming sector, industry and services,” he said.

López Obrador pledged that his administration will do all it can to help business navigate the minefield of government bureaucracy so that investment plans are approved and become reality.

“Together we can push the rheumatic and difficult elephant that the government sometimes is with its tedious and long [bureaucratic] procedures, all that which prevent things from being put into practice . . .” he said.

CCE president Carlos Salazar Lomelín explained that López Obrador will play a central role in evaluating new investment projects and facilitating their execution, adding that the government and private sector will meet regularly to assess the progress of the agreement.

Other CCE members stressed that in order to promote investment in Mexico there must be a strong rule of law, macroeconomic stability and a commitment to resolve the legal problems often faced by new projects in strict accordance with the law.

José Manuel López Campos, president of the Confederation of Chambers of Commerce, Services and Tourism, described the inking of the new agreement as a “turning point” that will encourage investment in new projects that will stimulate economic growth.

The Mexican Employers Federation said the agreement is a “sign that it’s possible to begin a new phase of cooperation between the public and private sectors in which the rule of law, confidence and certainty prevail.”

Source: El Financiero (sp) 

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