The increase in physical investment spending proposed by the Federal Executive in the Federal Expenditure Budget Project (PPEF) for the following year is applauded; however, it is insufficient to boost the reactivation of the Mexican economy and for physical investment to return to 2016 levels, experts warned.
Christopher Cernichiaro Reyna, researcher at the Center for Economic and Budgetary Research (CIEP), indicated that since 2016 infrastructure spending has decreased as a percentage of Gross Domestic Product (GDP).
Before legislators, on the third day of the Open Parliament to analyze the PPEF, the researcher pointed out that although infrastructure spending registers an increase from 3.18 to 3.49% of GDP the following year, it is still below the level that was reached in 2016 of 5.9 percent.
“(The proposed spending) reverses the situation a bit, but not enough. Besides that there is investment, the important thing is that it has social profitability and the government’s priority projects do not have it, it is something that has to be demanded “, said Carlos Hurtado, general director of the Center for Economic Studies of the Private Sector (CEESP).
He added that for the reactivation of the Mexican economy, after the Covid-19 crisis, the recovery of investment is essential, so the public sector must expand its spending on infrastructure, but it is not only to increase it, what is “desirable and legal ”Is that I do it with projects that prove that they are really profitable from a social point of view.
For the following year, the Federal Executive proposes a physical investment expenditure of 863,200 million pesos, which is 17.7% higher than the 733,500 million pesos that were approved for this year.
MSMEs and SMEs, without support
Another criticism made about the PPEF 2022 was the lack of support for MSMEs and SMEs, despite the fact that many still struggle with the effects caused by the pandemic, while others have had to close permanently.
Adriana García, researcher from México ¿Como Vamos ?, said that while this year there were two programs to support the sector – Microcredits for Wellbeing and the Financial Support Program for Family Microenterprises – for next year these have been eliminated.
“We see it very worrying that, in the middle of the pandemic, where we still cannot say that we are out of it, the programs disappear (…) it is unacceptable that the budget for the following year does not include financing for MSMEs and SMEs”, sentenced.
Electrical reform is not contemplated
As in previous Open Parliaments, in this one it was again alerted that the PPEF 2022 does not contemplate the budgetary impacts that the Electricity Reform proposed in recent weeks by the government of Andrés Manuel López Obrador, where it is proposed that the CFE has increased market share.
Jorge Cano, a researcher from México Evalúa, indicated that one of the main concerns about the Electricity Reform is that there is no budget impact study that contemplates an eventual increase in subsidies or payment of compensation in the face of the proposed changes.
The Chamber of Deputies has a deadline of November 15 to discuss and approve the PPEF and then be sent to the Federal Executive for publication in the Official Gazette of the Federation.
It is expected that after the discussion of the Economic Package, the legislators will prepare for the analysis, discussion and possible approval of the Electricity Reform proposed by López Obrador.
Reference-www.eleconomista.com.mx