Mexico To Cut Debt, Respect Banxico, Finance Minister Says
(Bloomberg) -- Mexico’s finance minister told investors in a call Tuesday that Mexico remains committed to cutting the country’s deficit, a day after president-elect Claudia Sheinbaum confirmed he had accepted to stay in his role during her administration.
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The government will continue to respect the central bank’s autonomy and seek closer collaboration with the indebted state oil company Petroleos Mexicanos, minister Rogelio Ramirez de la O said, according to people with direct knowledge of the call. He added that Juan Ramon de la Fuente, Mexico’s former ambassador to the United Nations and a senior member of Sheinbaum’s campaign, would lead the new administration’s transition team and noted he was also present in the call.
The call sought to ease investors after the Mexican peso dropped 3.8% to its worst one-day tumble since June 2020 following the elections, as a stronger-than-expected majority suggests the ruling party will be able to move forward with congressional reforms. The currency had pared losses before the conversation with investors started, and weakened 0.7% following the call.
De la O said Mexico’s deficit would be cut to around 3% of gross domestic product and that the country’s public debt would be kept on a sustainable path. On Pemex, he added that government authorities would be “availing ourselves from the support to be reflected in Congress in order to optimize the good use of public resources.”
He added that government would seek strong communication with investors and credit rating agencies to confirm “macroeconomic stability and fiscal prudence and the feasibility of our fiscal targets” as priorities.
The call was “very brief” and did not address the main concern of investors, which includes a series of congressional reforms that President Andres Manuel Lopez Obrador put forward earlier this year, said Marco Oviedo, a strategist at XP Investimentos, who participated in the call.
“The problem is that the issue is the reforms Morena wants to implement,” Oviedo said.
(Adds details on call, currency move and analyst comment.)
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