The remnant of Banco de México’s operations was one of the reasons why in previous years the Budgetary Income Stabilization Fund (FEIP) could grow.
That which last year, when the world enjoyed the economic and financial stability that we miss today, the federal government spent in the face of failure to meet its growth and income goals.
With a stroke, the 4T erased 125,000 million pesos from the FEIP, which had accumulated close to 300,000 million pesos. The government used a part of the “guardadito” set aside for emergencies and all because of its inability to correct useless spending projects that, in addition to low returns, generated enormous distrust among private agents.
For this year they already took a look at another good slice of that FEIP. In this 2020 there is indeed an emergency, but its use is not considered as a last resort after a substantial cut in public spending on projects that today, in the midst of a recession, are even more useless.
But there is something else. President Andrés Manuel López Obrador wants to put his hand in the vaults of the Bank of Mexico so that he can hand over to his government the remainder of this year’s operation!
Obviously, it is not a law that can stop the 4T from requiring the central bank to give it these surpluses. For that, it has a legislative affairs office, made up of all the Morena deputies and senators and satellite parties, so that they comply with any presidential whim.
Without problems, his obedient and solicitous benches change Article 55 of the Bank of Mexico Law for López Obrador to say what the President wants.
But what there is no logical way to ask for is an annual surplus, in April, when today the final balance cannot be any other than that obtained from the imagination. Nothing else.
If what the 4T wants is a loan from the bank, from Banco de México, they should really read the law that supports this autonomous institution. If the president wants to change the legal provisions to his best convenience, he will see what the general reaction of the markets is to such interference in the autonomous life of the central bank.
And worst of all, the president wants this imaginary advance of Banco de México’s operating surpluses, not to implement fiscal support programs for companies that are on the verge of bankruptcy today due to the recession of the “great closure”.
Rather, he wants the money to re-establish a fuel subsidy policy, with the sole purpose of not disturbing his political clients, who are getting thinner every day.
The defense of the autonomy of Banco de México is essential to prevent this economic crisis, which could be temporary, from becoming permanent in the face of the enormous shock of global mistrust that such an interference could generate.
In two years, AMLO will have exhausted 90% of the Budget Revenue Stabilization Fund
In its first two years, the Andrés Manuel López Obrador government will spend nine out of every 10 pesos that were in the Budgetary Income Stabilization Fund (FEIP).
At the beginning of this administration, there were 297 thousand 770 million pesos in that fund created in December 2000 with an initial contribution of nine thousand 133 million pesos. Its purpose is to compensate for shortfalls in expenses derived from the lower collection.
Of the balance that was accumulated with the surplus revenues from past fiscal years, the federal government took around 125 billion pesos last year to cover shortfalls in spending.
Although the fund’s rules do not allow us to know the specific destination of the resources, nearly 20 billion pesos were used to buy the 2020 oil coverage, insurance to guarantee that the sale price of a part of the oil exports that does Mexico stay at $ 49 a barrel.
For this year, the Ministry of Finance will use 128 thousand 544 million pesos more than the FEIP to compensate for a fiscal gap of 297 thousand million pesos that will cause the health crisis due to Covid-19 in public finances, this according to the Precriteria of Economic Policy for 2021, sent to Congress on Wednesday.
Thus, at the end of this year, 30 billion pesos will remain in that fund to “face any other contingency,” says the document presented by the agency in charge of Arturo Herrera.
President Andrés Manuel López Obrador considered in his conference yesterday that the crisis will be temporary, we are going to leave soon, it is not a debacle, he said.
For analysts, given the magnitude of the impact, the government should focus on giving greater support to companies and redirecting spending to give confidence and that the economic recovery will be faster with private investments.
“The importance of fiscal and economic stimuli at the moment is to give certainty to companies, economic agents and workers. Also to avoid a slow recovery and that the damage will continue to be seen in the coming quarters or until 2021, ”said Alejandro Saldaña, chief economist at the bank Ve por Más (BX +), in a videoconference.
In an analysis, Intercam pointed out that the increase in the fiscal deficit and financing requirements will push the total public sector debt towards 50 percent of GDP in the coming years. Gabriela Siller, director of Economic and Financial Analysis of Banco BASE, recalled that governments are announcing expansive fiscal policy measures to counter the effects of the coronavirus, with what is expected to be a greater public debt at a global level.
He recommended that debt be increased as a proportion of GDP by two or three percentage points to revive the economy and that resources be redirected to protect jobs.
“If you want to lessen the effects and lay the foundations for a rapid recovery, you must take care of employment, especially in the industries that are being seriously affected.
Source: eleconomista.com.mx, elsoldemexico.com.mx
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