The Hermanos Rodríguez race track, home of the Mexican Grand Prix.
The future of the Mexican Formula One Grand Prix is in doubt because the federal government intends to allocate its funding to an ambitious rail project in the country’s southeast.
The mayor of Mexico City, which hosts the race, told a press conference last week that as of next year, most of the 400 million pesos (US $21 million) the government puts up annually for the event would go instead to the Maya train project.
“For 2020, the federal government is no longer contemplating this spending as most of it has been set aside for the Maya train,” Claudia Sheinbaum said.
The mayor, who is a close ally of President López Obrador and governs for his Morena party, described hosting the Gran Prix as “onerous,” stating that “the issue is how much public funds are invested in this when there are so many needs in the city.”
However, Sheinbaum said that there is no doubt that the 2019 edition of the race, scheduled for late October, will go ahead and explained that her government has entered into talks with the company that organizes the event to look at alternative funding arrangements.
“We’ve sat down with Ocesa, which has the concession for this spectacle, to see if it can reduce the amount [of funding] or if there are any other alternatives,” she said.
The federal government’s decision to pull the plug on funding for the F1 race is in keeping with López Obrador’s frequent criticism of anything he considers “fifí” — frivolous or snobbish.
On Friday, he said he was prepared to shift his government’s policy of “republican austerity” up a notch to “Franciscan poverty” in order to “transfer money to the people so that there is development, work and well-being.”
But cancelling the F1 race, which returned to Mexico in 2015 after a 23-year absence, would be counterproductive, a former Mexico City sports chief argues.
Horacio de la Vega said the event brings a lot of money to Mexico, including that spent on accommodation, and that it projects a positive image of the country.
“There is no other event that compares to it,” he said.
Alejandro Soberón, chief of Ocesa parent company CIE, said the economic spillover effect of last year’s race, including money spent in Mexico and media rights, was 14.8 billion pesos (US $774 million).
The Mexican Grand Prix, held at the Autódromo Hermanos Rodríguez race track, attracts around 33,000 motorsports enthusiasts, among whom are a large number of foreigners.
Last year, fans from the United States were expected to make up 22% of all spectators at the race, according to data from StubHub, an online ticketing company,
The federal government must be given time for its economic decisions and actions to yield results, a new deputy governor of the Bank of México said today.
In an interview with the state news agency Notimex, Jonathan Heath said he expected economic growth to strengthen – possibly towards the end of this year – although the International Monetary Fund (IMF) last month cut its 2019 and 2020 growth forecasts for Mexico by a combined 0.9%, citing lower investment.
“Just because we’re seeing a temporary slowdown now, there’s no need to be pessimistic and think that everything’s bad. You have to give it time for everything to begin to fit into place and to redirect the growth of this country,” Heath said.
“We’re going through difficult times [but] it’s not going to be something that’s permanent, rather I’m sure that, in a while, we’re going to see better news on the horizon,” he added.
Heath, a University of Pennsylvania-trained economist, said it was natural for the first year of a new government to be complicated, explaining that the López Obrador-led administration is trying to redirect public spending and that can cause difficulties in the short term.
He said that while it was very likely that there will be a significant economic slowdown in the first half of this year, steps taken by the new government – such as austerity measures, the introduction of a northern border free zone, the crackdown on fuel theft and the undertaking of infrastructure projects – could start to have a positive impact towards the end of the year or at the start of 2020.
“Sooner or later, they have to start delivering results. We’re starting in a very uncertain environment both externally and internally but I believe that the government is very conscious of that and little by little we’ll put things in their place and create the [necessary] environment [for the economy] to be able to grow,” Heath said.
The deputy governor explained that the gasoline shortages, teachers’ rail blockade in Michoacán and strike action by workers in Tamaulipas would all continue to impact negatively on the economy in the short term but added that they are temporary issues that will be resolved.
“. . . I have complete faith that down the road we’ll see much more favorable conditions,” Heath said.
He highlighted that inflation slowed in the first half of January and said that it would likely continue to trend downwards, allowing it to reach the bank’s target of 3% – if not by the end of this year, definitely during 2020.
Heath said that there is now greater stability in energy prices, particularly with regard to the cost of gasoline, whose spike at the start of last year contributed to the inflation rate ending 2018 at 4.83%.
He explained that the bank will closely monitor inflation in order to take appropriate monetary policy decisions, adding that it was very difficult to predict what will happen with the benchmark interest rate, which is currently set at a 10-year high of 8.25%.
He described President López Obrador’s respect for the autonomy of the Bank of México as “a kind of anchor,” which to a certain extent guarantees Mexico’s macroeconomic stability.
The 64-year-old economist, who has more than 30 years’ experience analyzing the Mexican economy, will remain as a Banxico deputy director and sit on the central bank’s board until 2026.
Heath said that he was conscious of the responsibility he has taken on and the decisions “of great importance” he will make as a board member.
He added that he had a lot of fun in his “previous life” and expects to keep enjoying himself in his new role.
“For me, it’s really fascinating to look at and analyze economic indicators, interpret them, try to formulate outlooks, try to see where the country’s going. That’s what has fascinated me and I’ll keep doing it, just in another environment with another level of responsibility,” Heath said.
Heath contended that it didn’t matter whether Mexico moved towards the right or towards the left politically speaking, the most important focus for the government remained constant: that the economy grows, that more jobs are created, that wealth is distributed more equally and that poverty is reduced.
Joining him as a new deputy governor and member of the central bank board is Gerardo Esquivel, a Harvard-trained economist who previously served as an economic advisor to López Obrador.
Heath said he was confident that both he and Esquivel would contribute to the strengthening of Banxico and help it to achieve its main goals of ensuring purchasing power stability, especially for lower socio-economic classes, and creating an environment of macroeconomic stability capable of helping Mexico to achieve higher growth and greater development.
The five-member Banxico board also includes Governor Alejandro Díaz de León and deputy governors Javier Guzmán and Irene Espinosa.
Propane supplies began running short in at least two municipalities of Baja California Sur Friday as a result of the federal government’s strategy against fuel theft.
The situation had worsened by Sunday, when the state’s Sustainable Energy Secretariat issued a statement to explain that while there were no shortages of propane, the fuel was being rationed in order to avoid reaching a “critical state.”
“The situation with the federal government’s strategy against fuel theft has had an effect and, even though there is supply, the reserves were rationed and states in central [Mexico] were given top priority,” said Secretary Luis Solís Miranda.
Rationing affected the whole country, he continued, in an effort to make supplies last for everyone.
He said federal agencies have assured the state that distribution of propane should be back to normal by Tuesday.
Yesterday, the newspaper El Universal confirmed that propane delivery services had been suspended in the state capital, La Paz, and Los Cabos.
Federal authorities recovered an internet balloon after it crashed Sunday afternoon in Jonacatepec, Morelos.
The balloon was part of Project Loon, an initiative by Alphabet Inc., owner of the technology company Google, to provide high quality internet access to rural and remote populations and areas affected by natural disasters.
It does so with high-flying networked balloons that are linked to an internet service provider on Earth.
It earned the name Project Loon because early reports of the venture called it “unprecedented and loony.”
The balloon that came down Sunday was launched in Puerto Rico on November 8 and remained airborne for 87 days before the crash.
Federal, state and local authorities responded to the crash and secured the area. An instruction booklet and contact information was found among the wreckage, which authorities used to contact the Alphabet subsidiary Loon LLC . Company employees soon arrived on the scene.
The crash in Morelos was the first to be witnessed publicly. According to Google, the Project Loon balloons have flown all over the world for millions of kilometers. The company claims to be on the cusp of securing continuous internet connections for some rural areas with its balloon network.
A 78-year-old Canadian expatriate was shot and killed in the Jalisco municipality of Chapala last Friday.
Local authorities confirmed the incident in a press release today.
Neighbors of the victim reported Friday that the man had been walking near the El Dorado subdivision in San Antonio Tlayacapan just before noon.
A witness who saw the shooting said on social media that the attacker fired at the man, who fell, and shot him again in the head before fleeing the scene.
Authorities said nothing about the case until today when they reported the murder, but with few details. The victim’s name was not released.
Canadian authorities said Saturday they were aware of the incident and were providing consular services to the family, but would not comment further due to privacy laws.
The municipality of Chapala said security had been reinforced in the area of the shooting.
Relatives exhibit photos of missing family members outside the National Palace.
Mexico is an “enormous hidden grave,” a federal official said today while presenting a 400-million-peso plan to fund search efforts for missing persons and to combat forced disappearances and kidnappings.
Speaking at the presidential press conference this morning, Alejandro Encinas, undersecretary for human rights, migration and population in the Secretariat of the Interior (Segob), said the plan would include a “real implementation” of the General Law on Forced Disappearances promulgated by past president Enrique Peña Nieto.
Encinas said that last year 468.9 million pesos (US $24.5 million) was allocated to the National Search Commission but only 6 million pesos was spent.
“That budget was only on paper,” he charged, adding that this year the full 400 million pesos will be used by the commission.
“The fundamental objective of this plan . . . is to design, with the participation of the family members of victims . . . the public policies and procedures . . . for the search, location and identification of missing persons . . . .”
It will also implement efforts to prevent the crimes, investigate them and punish those responsible, Encinas said.
“It’s estimated that there are currently 40,000 disappeared persons, more than 1,100 clandestine graves and around 26,000 unidentified bodies in morgues . . . that gives an account of the magnitude of the humanitarian crisis and the violation of human rights that we are confronting,” he said.
Encinas said that he will interview 11 candidates for the position of National Search Commission chief at public hearings this week and that by Friday an appointee will be named.
That official will oversee the government’s search efforts including the design and implementation of a national exhumation program and the forensic identification of victims, he said.
Encinas explained that the government is working with international organizations and the families of missing persons to draw up protocols for the investigation of forced disappearances, the search for disappeared persons, the exhumation of bodies and their identification.
The aim, he said, is to “develop a differentiated approach that allows us to better attack search tasks throughout the country’s entire territory, which unfortunately has become an enormous hidden grave.”
Encinas said that special attention will be given to the routes traveled by migrants through Mexico including those in the states of Chiapas, Oaxaca, Veracruz and Tamaulipas because between 8% and 10% of missing persons are Central Americans from the northern triangle countries of Guatemala, Honduras and El Salvador.
The undersecretary said the plan’s biggest challenge is to ensure that state-based search commissions are put into place in all 32 entities as so far only eight have been established.
“We have four [states] where there is already a decree that allows their formation but a person in charge hasn’t been named and in 20 [states], more than a year after the general law [on forced disappearances] was promulgated, they haven’t even taken legislative steps for the formation of state commissions, which is urgently needed,” Encinas said.
Removing competition, capitalism and hierarchy from a restaurant may seem like an impossible feat. But Hierba Dulce, a feminist cafe and meeting space in Oaxaca’s city center, proudly asserts that it does just that, and with “curative” food to boot.
With little more than a year in operation, the plant-based restaurant offers accessible prices for de-industrialized foods. There is no oil, sugar, salt or animal byproducts used in the cuisine, and diners likely won’t know the difference.
“We don’t use any processed materials in the kitchen, not one,” said Mariana Favela, co-director of Hierba Dulce and its sister project, Pochote Press, a magazine based on feminism, social movements, political philosophy and aesthetics.
The letterpress and risograph magazine was originally based in the same space as Hierba Dulce, before the café became wildly popular.
“The idea was that we could have a public space to meet up for cultural and academic events, book presentations,” Favela said. “Thinking that ultimately a restaurant is a really intimate thing because it opens a physical space for you to share with people, including food, which is a form of communication, a language.
Ingredients that go into Hierba Duce’s slow food. Hierba Dulce
“We wanted to see to what point we could really materialize healthy and abundant food, breaking the myth that healthy food, now more than ever, is considered a luxury. We see it as a right. And we still have the goal of feeding the community because there’s a really strong gentrification in Oaxaca right now.”
Hierba Dulce gives special attention to the woman-centered gastronomic knowledge that has been in many cases dispossessed in the wake of cultural obsessions with mostly male chefs on the world stage. And even in Oaxaca, with a proliferation of restaurants considered “gourmet” that seems to overtake the city’s culinary scene.
“Historically the kitchens are the schools of the village, where they maintain knowledge, recipes and culinary traditions,” Favela said. “These things can’t even be written down because it’s something you have to learn with your hands, with your eyes, with experience and practice. We feminists have been very critical of these superstar chefs because they say they aren’t machistas because they have a mom or they love their sister. The chefs recognize the knowledge their mothers have imparted upon them, but it’s not the mothers who are on the magazine covers, or in charge of these restaurants.”
This aim to recuperate the kitchen as a feminine space, in the manner that they are places to learn and share, has led to full authority being given to Hierba Dulce’s Georgina Cruz, who has five decades of culinary experience at prominent Oaxacan restaurants such as Casa Oaxaca where she served as the mole specialist. She is also a guest instructor at Escuela de Gastronomía Mexicana in Mexico City.
“What we offered is this restaurant, even though we founded it we wanted to give it to her; she is the boss and she is the one who makes the orders,” Favela said. “We see this as a school, as a way to avoid losing the recipes, and the ingredients that go into them.
“It’s a very complicated thing to know the recipes in the traditional moles that they used to prepare. It takes 30 years to be able to prepare a good mole from scratch to finish. A big issue we had when we decided to program ourselves as de-industrialized was that Georgina had to modify some of the recipes because in Mexican cuisine they use a lot of oils and byproducts of colonial animals like pig fat.
Mariana Favela is co-director of Hierba Dulce in downtown Oaxaca. Megan Frye
“So there was a combination of investigation and asking, mostly to the producing families, how do they keep cooking without using those industrialized ingredients? We are looking back further to the pre-Columbian past of this region, and the products that are part of that cuisine.”
Everything is cooked over a slow fire, including bread and beans that require nearly 24 hours from the start of the process to the time they are ready for consumption. This, coupled with the fact that Hierba Dulce has made a commitment to keep prices accessible for the producers of the food itself, didn’t sound like a very solid business plan in the beginning.
But Favela said that wasn’t the idea. The goal was that everything would be made in house from scratch and that the space would invite conversations on responsible consumerism.
“It’s a balance, keeping the prices as low as possible without affecting the economic stability of the people who work here,” Favela said, adding that recently an older foreign couple suggested that Hierba Dulce put a higher price tag on its offerings.
“It’s an example of how this space is for education, not just in the kitchen, but for Mexican and international tourists and for people who don’t know our culinary traditions or how we interpret our gastronomy. So that we can teach people to value things beyond money. And this I think has been one of the most difficult things: breaking the idea that if something is good, it has to be expensive, which is something that is very complicated to express in our commodified societies.”
Menu items range in price from 40 pesos for appetizers — such as a generous portion of sourdough bread slices topped with heirloom tomatoes and house-made hummus, to a yellow mole with mushrooms for 80 pesos and handmade enchiladas filled with purple potatoes and quintonil (a Mexican herb) at 60 pesos. Oaxacan coffee, herbal infusions and mezcal also are available.
Restaurant and meeting space Hierba Dulce. Hierba Dulce
Being responsible toward producers, honoring traditional recipes and traditional cooks — who are most often women — is a major focus of Hierba Dulce’s work.
“It’s part of our process of decolonization; preserving this knowledge that doesn’t fit into books,” Favela said. “These traditional cooks deserve recognition and also freedom. For example our mezcal bar, it’s a bar of women mezcal producers because while women have always been present in the production of mezcal, they have been invisibilized . . . . recently we had a marinade of mole and mezcal that was a collaboration between Georgina Cruz and Graciela Angeles from Mezcal Real Minero; and we have collaborated with the master distiller Berta Vazquéz.
“It’s a project that just guided itself in a certain sense. These are the mezcals that we like best, and we want this place to be an open platform for women who have marvellous projects in their own aspects.”
Having a truly just kitchen implies detaching the typical restaurant hierarchy from its food, and also being mindful of where all produce comes from. The restaurant is committed to non-violence, from within its walls to the local communities where their products are sourced.
“All of our avocados are criollo varieties, we don’t use the Hass variety because it’s a type of produce that is controlled by the narcos,” Favela said.
“As consumers, we have to be responsible about what kind of businesses we are supporting with our habits. There’s an avocado boom right now, and this is something that people should know, that they are financing drug traffickers and other groups that force people to work in either drug or avocado farms. We are very privileged to live in a place with so many varieties of criollo avocados, and they all have completely different flavors.”
Carlo Petrini, founder of the international slow food movement, recently visited Hierba Dulce and the staff was delighted to have him; overjoyed to be chosen over other restaurants that undoubtedly extended offers to him while he was in town.
But Favela says the restaurant changed nothing despite having such a high-profile guest. The food is made for anyone and every day, it is the same quality, she said.
“If traveling serves for something, it’s not to extend yourself over others,” Favela said. “It’s not to prey upon the place you arrive to. It’s for you to learn something from the places that you visit. And Oaxaca has a lovely lesson for many other places: that the most valuable things often don’t cost a lot of money. And we have to learn to care for them, because if we don’t care for them, they are going to run out.
“This applies to mezcal, agaves in general, varieties of corn, animals, etc. It’s a predatory thing, this style of pushing local gastronomy to do things that the international scene believes are luxurious. Such as incorporating deer, which are sacred animals in Mesoamerica, and using these animals every day on their menu. It’s a type of cultural dispossession, it’s a lack of knowledge of our own story, and further, it’s environmentally something that doesn’t show people that we are at a critical moment as modern societies, and that we have to start to recognize other forms of consumerism.”
“We like to say that we welcome everyone with open arms, but that we cook for Oaxaca.”
Megan Frye is a writer, photographer and translator living in Mexico City. She has a history of newsroom journalism as well as non-profit administration and has been published by several international publications.
A bearded Padrés is released from prison on Saturday.
A former governor of Sonora has been released from prison on bail more than two years after he was placed in preventative custody on corruption charges.
Guillermo Padrés Elías left Mexico City’s Reclusorio Oriente prison on Saturday night after a federal judge accepted two properties owned by relatives of the ex-governor as security.
Padrés, who governed Sonora from 2009 to 2015, had been in prison since November 2016 after he was arrested on charges of money laundering, tax fraud and organized crime.
Authorities in Sonora are also investigating dozens of other officials who served in Padres’ government who allegedly embezzled more than 30 billion pesos (US $1.6 billion) in public funds.
In a statement, the Sonora Anti-Corruption Prosecutor’s Office (FAS) said the ex-governor has not been absolved of the charges against him.
“It should be noted that he hasn’t been declared innocent, his [legal] processes continue and he will have to periodically report . . . to the judges hearing his cases, he must wear an ankle bracelet and must not leave the country without authorization. It is important to mention that Padrés Elías, to the present day, faces two federal criminal proceedings,” it said.
One of the two properties put up as bail is a 7,000-square-meter ranch valued at more than 31 million pesos and owned by Padrés’ father-in-law, while the other is an 8,800-square-meter parcel of land valued at almost 11.8 million pesos and owned by the ex-governor’s brother-in-law.
The two properties, both located in Sonora, together cover the 40-million-peso (US $2.1-million) amount set as bail.
Padrés left the prison sporting a long beard in sharp contrast to the well-trimmed moustache he used to wear.
He didn’t make any comment to the waiting media contingent but later released an audio recording saying that he was with his family and “very happy” to be free.
“I send all of you a big hug, I hope to see all of my friends soon . . . The only word that comes to mind is thank you. I’m free now cabrones [assholes] . . .” he said.
The former National Action Party (PAN) governor’s release from jail follows an impassioned plea for help that Padrés made to President López Obrador late last year via a recorded message submitted to journalist Ciro Gómez Leyva.
“Mr. President, I’m sure that you won’t allow the old practices of the PRI [Institutional Revolutionary Party]. I raise my voice because I’m sure that you won’t allow those who remain from the old system to continue threatening me. You won’t allow them to continue killing me day by day. I raise my voice to ask you to help me. Mr. President, I ask you to help me and give me my freedom,” he said.
Padrés also maintained that he is innocent of the crimes of which he is accused.
“I denounce that I have been denied the right to a fair trial. I’m a political prisoner. I live in a hell . . . They [the former government] have accused my family and imprisoned my son for more than nine months to pressure me to accept crimes that I didn’t commit, and they did it without any proof. They wanted me to implicate myself in crimes that I didn’t commit,” he said.
López Obrador said this morning that he respected the decision to release the former governor.
“I respect the decision of the judicial authority and what’s clear in this case is that the new government doesn’t act by making orders, it doesn’t force any judge to punish anyone . . . We’re respectful of the independence of the judicial power, there’s no political persecution, the government is not used to go after opponents as was the custom . . .” he said.
Lake Chapala communities are struggling with a landslide of negative publicity lately.
On social media platforms, current residents as well as prospective tourists and potential expat residents are beginning to wonder whether their perceived paradise has become a pair o’ dice. Let me explain.
According to the Lake Chapala Reporter, an unconfirmed murder of a Canadian expat in Ajijic occurred Friday around noon. The week before, four people were shot in Chapala. Two were killed and two are hospitalized.
Two armed carjackers were arrested in Chapala in the past week. Home burglaries are on the rise. Car burglaries are frequent. The crime statistics for the state of Jalisco reported to national authorities were found to be falsified from 2015 to 2018: only 70% of the actual crimes were reported (discovered via a recent audit of the same).
Three men and one woman were arrested for robbery last week — then let go — as the victims refused to press charges for fear of retaliation.
Vehicle license plates are being stolen in droves — then used by the thieves who accumulate tickets and don’t pay — coming back on the owner of the plates.
On January 29, the municipality of Chapala was ordered by a Mexican court to pay 90 million pesos (US $4.7 million) for default on payments due on a completed public lighting contract. Chapala has two days to respond to the order or the municipal council can be detained for 36 hours. They have no money to pay the sum.
The new mayor changed the charter in October 2018 whereby municipal officials and delegates are no longer elected, but appointed by the mayor. He has yet to make those appointments.
Then there is the recent article and video entitled Robberies on the Rise in Lake Chapala, produced by CGTN News (a collection of international news outlets), that has gone viral on the internet. It involves interviews with an elderly Ajijic couple who had their home invaded.
All this plus the recent gas theft fiasco in Mexico, shutting down and then reopening Mexico’s gas pipelines, and the horrific, fiery tragedy that led to the loss of over 120 lives has captured comprehensive, international news media coverage.
Then there’s this: Jalisco authorities reportedly cremated 1,581 bodies from 2006 to 2018 — then threatened families (some by gunpoint) to accept ashes of missing loved ones, even though they had no evidence that the ashes were actually from their deceased family members.
President AMLO claimed the “drug war is over — we are no longer targeting cartel leaders.” Fitch Ratings cut Pemex’s (Mexico’s national oil company) bond rating to BBB-, a shade above junk status. They also reduced Mexico’s national/sovereign bond debt rating to AA. Fitch has stated “Pemex has been bankrupt since 2009.”
Other bond debt holders declared: “Investors have AMLO’s policy process under a microscope. If the expected capital injection is not forthcoming then the market will build a higher political risk premium into the Mexico sovereign spread.”
Thus, the outlook is for Mexico’s fundamentally essential financial ratings to continue to deteriorate. I won’t go into the other headlines on crime and violence in Mexico that have populated the international air waves over the past two weeks.
AMLO recently disbanded the Mexico’s national tourism agency. Those operations are now supposed to be handled by Mexico’s embassies. The agency left US $3.7 million in debt. Hello Mexico? There is a serious public relations malady that is threatening the country!
Granted, Americans are saddled with a president who suffers from Border Wall Personality Disorder. Most informed U.S. citizens are afflicted with POTUS Trumpatic Stress Disorder (a new form of PTSD), traumatized by daily denigrating tweets and lies from their president coupled with bolts of shame ricocheting through their beings. We all have our burdens to bear.
Life is filled with risk. So are nations. Prospective tourists are hyper-sensitive to perceptions of risk. The recent wave of negative news out of Mexico, particularly Jalisco, informs those tourist perceptions and travel plans. It distinctly affects those who currently reside in Mexico.
Many U.S. and Canadian citizens who have been considering the Lake Chapala area for relocation are now wondering aloud on social media platforms: “Is this paradise or a pair o’ dice?”
The current inertia of the odds in Mexico is being observed internationally by those standing around the table watching the action. As in the casino of life, when the odds look too long, people move away from the table.
Bill Dahl is a United States-based investigative journalist who recently completed four weeks in the Guadalajara/Chapala region of central Mexico examining the current challenges in the area.
The big three credit ratings agencies have drawn attention to corruption and the lack of rule of law in Mexico for years despite a claim by President López Obrador to the contrary.
Following Fitch’s downgrading of the state oil company’s credit rating to just above junk status last week, López Obrador accused rating agencies of hypocrisy, declaring that they had effectively endorsed corruption committed during the administrations of past governments and not recognized his commitment and actions to combat it.
“They maintained a complicit silence,” he said, referring to what he described as “the looting” of Pemex under successive past governments.
However, a survey of past views proffered by Standard & Poor’s (S & P), Moody’s and Fitch with respect to Mexico showed that they have spoken out about corruption.
The survey, conducted by the newspaper El Economista, revealed that the forthright opinions date back several years and, in one case, to 2007.
Standard & Poor’s touched on the issue of corruption in a December 2007 report entitled Creating the New Rules of the Game in Mexico, the newspaper said.
In 2016, the same agency said in another analysis that political reasons were a bigger barrier to growth in Mexico than economic ones, and in 2017 it said that corruption could affect the sovereign credit ratings of Latin American countries in general.
“For many years, we have pointed out the corruption problem . . . as an intrinsic factor in Mexico’s rating,” said S & P sovereign risk analyst Joydeep Mukherji.
“Since I started analyzing Mexico, when [former president Vicente] Fox was in power, we started talking about the structural and institutional weakness that prevails in the country. We always highlighted corruption and the shortcomings of institutions,” he added.
Mukherji also said that corruption and limited respect for the rule of law have been factors in Mexico’s weaker than expected economic growth in recent years.
Moody’s signaling of corruption in Mexico goes back to 2010, El Economista said.
That year, the company’s associate managing director for the Americas, Mauro Leos, warned that corruption was a factor that holds back the competitiveness of Mexico and Mexican companies and also impacts negatively on economic growth.
In 2014, when Moody’s upgraded Mexico’s long-term credit rating to A3 – four notches above minimum investment grade – following the approval of structural reforms implemented by the past federal government, it explicitly said that the probability of a further upgrade was very low because Mexico’s “institutional strength/framework” hadn’t improved.
The company’s credit rating of Pemex is currently on a par with that of Fitch at just above junk status while its rating for Mexico is BBB+.
Fitch, meanwhile, has constantly warned that prevailing corruption is a factor that hinders Mexico’s economic potential, El Economista said, including that of state-run companies such as Pemex.
“Yes, the agency has made observations about corruption, violence and insecurity as well as Mexico’s institutional weakness; considerations that are reflected in the sovereign rating ceiling [it has hit],” said Shelly Shetty, the company’s head of sovereign ratings for Latin America
Those three factors – corruption, violence and insecurity – “have for years limited the possibility of Mexico’s sovereign rating going above” its current BBB+ rating, she said.
Analysts from all three credit agencies said that while they have denounced corruption and the lack of the rule of law in Mexico, it is not their job to do so.
“. . . We analyze the capacity [of a country or company] to pay debt based on its financial state,” said Moody’s senior analyst Nymia Almeida.
She added that corporate governance is an important consideration for ratings agencies because “the more robust corporate governance is, the less risk there is of fraud and corruption.”
