The Day at a Glance | June 29 2020

USMCA will not compensate for lack of confidence: Werner

The Director of the Western Hemisphere Department at the International Monetary Fund, Alejandro Werner, assured that the USMCA will not be enough to compensate for the lack of confidence that keeps investment in a setback in the country, at least not in the next two years. Werner considers that the reorganization of productive chains will take time, which is why revenue from new investments may not immediately occur. This leads the IMF to believe that interest rates could keep falling in Mexico – the only stimulus measure since Mexico has one of the smallest fiscal responses among G-20 economies in light of the crisis. Economists in charge of following up on Mexico on behalf of the IMF don`t consider that the USMCA will be strong enough to counter the contraction in investment, which is something that the government does not believe; Mexico`s government has put a good proportion of its expectations of recovery in the agreement. The agreement comes into force on July 1st. Still pending is the Senate`s approval of 5 laws that will promote legal system harmonization with what is stipulated in the agreement, which is why its discussion was included in the extraordinary session that will take place on the 29th and 30th in the high chamber. With its inclusion in the legislative agenda, and due to lack of time, the legislative initiative – that proposes to extinguish some trusts and amend the Federal Law on Budget and Treasury Responsibility, with the intention of making resources available for current spending and investment in the Federal Government – will not be discussed.