Any reform promoted by Mexico should improve investor confidence: IMF

The International Monetary Fund (IMF) considers that given the weakness that private investment in Mexico has shown in recent years, it would be pertinent that any reform that is promoted seeks to improve the confidence of companies and investors.

“It is difficult to make any categorical comment on the reform to the electricity sector that is currently being discussed in Mexico, because we do not know what could change. But it is true that private investment has weakened in recent years and any strategy they develop should invite better use of their commercial context, favor the arrival of productive investments and seek to make the country increasingly dependent on the renewable energy”Explained the Acting Director of the Western Hemisphere Department at the IMF, Niegel Chalk.

At a press conference from Washington, to present the Economic Outlook for the Western Hemisphere that includes Latin America and the Caribbean, he recognized that the mexican economy shows a rapid economic recovery thanks to the momentum of US demand.

But if the intention is to strengthen this impulse, it will be relevant that the Mexican authorities grant internal fiscal support and strengthen public spending towards the health and education sectors, which “were the most damaged in the pandemic.”

Regarding the Flexible Credit Line that they are about to renew for Mexico, he commented that it is a clear complement to the international reserves that the central bank has. He observed that the central bank’s responsiveness to a financial shock is also supported by the open swap line with the Fed and it is underpinned by the recent injection of Special Drawing Rights.

Neither of these facilities substitutes for the other, he assured. They all complement each other to strengthen the capacity to respond to any risk of external shock and this support is what has favored the best financing conditions that Mexico has in the market, he assured.

Regarding inflation, he explained that a significant proportion of the pressure felt on Mexican prices “is imported from the United States” and another part reflects an internal situation. However, he said that expectations are well anchored.

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