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 News Around the Republic of Mexico | May 2005 
Mayor Outlines Fiscal Policy
 John Authers, Richard Lapper & Sara Silver - Financial Times
| | Mexico City Mayor Andrés Manuel López Obrador says he will be practical in terms of his economic strategy if he is elected president in 2006. |
Mexico City — Andrés Manuel López Obrador, the leftwing frontrunner for the presidential contest next July, has made a strong attempt to define himself as an economic pragmatist, arguing that he would maintain both a cautious fiscal policy and central bank independence if elected.
In an interview with the Financial Times, he said extra public spending would be financed not by debt or extra taxation, but by US10 billion in spending cuts equivalent to an 8 percent reduction in real terms in his first year in office.
A clampdown on rampant tax evasion would generate resources, claimed López Obrador. Mexico raises only about 50 percent of what it is owed by taxpayers.
"Macro-economic balance has to be maintained," says López Obrador, who is mayor of Mexico City. "It is just common sense. Whenever there is economic instability it always hits people who have least."
He said he would stimulate growth "primarily through investment in the construction industry," which would have a "multiplier effect" on the economy.
There was governmental waste to eliminate. "Just look at how much Supreme Court judges are paid in Mexico," he said. "We are talking about US30,000 a month. I think that they earn more than any equivalent official anywhere else in the world. Then add on the secretaries, consultants, helpers it's serious costs."
López Obrador ruled out any renegotiation of the North American Free Trade Agreement (NAFTA) with the United States and Canada, even though he has fiercely criticized it. "We are talking about asserting our rights within the treaty. We aren't talking about attempting to change the treaty," he said.
The statements indicate that López Obrador would pursue an approach to economic policy more like that of Brazil's leftwing President Luiz Inacio Lula da Silva than that of Venezuela's President Hugo Chavez, in appeasing businesses concerned by his leftwing rhetoric and occasionally autocratic style.
He did not name his economic team Lula did so during his campaign. But he said he would appoint only candidates with technical economic expertise.
López Obrador has consistently led opinion polls on next year's presidential election since the first surveys in late 2002. But his chances have improved since the abandonment last month of an attempt to impeach him for an alleged contempt of court in a planning dispute. According to polls he now enjoys an advantage of between 12 and 17 points over his nearest challenger.
López Obrador ruled out privatizing the cash-strapped energy industry, dominated by Pemex, the state-owned oil company.
Instead, he would reform Pemex's management structure and allow it to keep more of its profits for re-investment through austerity measures and by saving money elsewhere in the federal government. Privatization was "unnecessary" because "this is a profitable business." |
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