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 News Around the Republic of Mexico | December 2006 
Mexico's Congress Passes Balanced 2007 Budget
 Reuters
| | Mexico's President Felipe Calderon passes an immigration sign during a visit to the border town of Nogales, Wednesday, Dec. 20, 2006. Calderon greeted immigrants returning from the United States for the holiday season, and vowed to create more jobs in Mexico to keep them home for good. (AP/Gregory Bull) |
Mexico's Congress approved the government's 2007 budget on Saturday, the second balanced fiscal plan in two years after a long history of overspending.
Lawmakers passed President Felipe Calderon's first budget with minor tweaks to edge up funding for highways, education and rural areas.
Mexico has improved its economic and fiscal stability in recent years and tamed once unruly inflation, opening the door to investment grade credit ratings, mortgage loans and Latin America's first-ever 30 year fixed-rate peso bond.
The 2007 budget foresees total outlays of about $205 billion but is not enough to make drastic improvements to education and infrastructure, or to ween Mexico off its dependence on oil revenues.
Legislators passed an increased tax on tobacco, but blocked a tax on sodas on the ground that it would hurt the poor.
The proposed soft drinks tax would have hit millions in soda-mad Mexico, which guzzles more Coca-Cola drinks per head than any other.
Mexico has one of the lowest tax collection rates in Latin America and depends on volatile oil income for about a third of government revenues. The country is the world's No. 9 oil exporter by volume.
Conservative Calderon, who began his six-year term this month, wants to persuade lawmakers to pass a fiscal overhaul to raise the government's tax take.
His predecessor Vicente Fox tried to impose a new tax on food and medicine but was blocked by opposition in Congress and from ordinary Mexicans.
Lawmakers came up with extra funds by increasing the estimate for the average Mexican oil price in 2007 and dipping into a reserve financed by past surpluses from crude sales.
At $42.80 per barrel, the increased crude price forecast is 30 cents above Calderon's original proposal.
Some of Calderon's proposals, like cutting spending on higher education, had been widely criticized.
($1 = 10.877 pesos) |
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