IVA and Oil Reform – The Expert Take

By Duncan Wood, 3/4/2013

Last Saturday’s vote by the PRI party to change its statutes to allow for the application of the value added tax (IVA) to food and medicine, and to allow for increased private participation in the oil sector, significantly improves the prospects for the reform process under Enrique Peña Nieto. This marks an important victory for the reformers within the party, and is a sign that the government now faces minimal internal party divisions that could hold back the reform process. Although much bargaining and negotiation remains with the other parties, the fact that Peña Nieto can now move ahead to talk meaningfully with the other parties in Congress with a united party behind him strengthens his bargaining position.

Mexico’s New President: Tearing up the script

The Economist, 2/14/2013

LAST summer Enrique Peña Nieto’s determined face stared down from election posters, promising Mexicans: “You know I will deliver.” Just over 38% of voters were convinced, enough to hand him the presidency. Since his inauguration on December 1st he has indeed delivered several new policies and reforms—just not the ones voters and pundits expected.

During the campaign Mr Peña’s aides in the Institutional Revolutionary Party (PRI) said that before Christmas of 2012 there would be a fiscal reform to increase the government’s meagre tax revenues. That would be swiftly followed by a shake-up of the energy industry to give a competitive nudge to Pemex, the state-run oil and gas monopoly, at whose headquarters a suspected gas explosion killed 38 people on January 31st. Mr Peña’s critics retorted that he was a puppet of special interests, such as the teachers’ union and powerful broadcasters.

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Poor Treasury, Poor Country (in Spanish)

Jesús Reyes Heroles G. G., Nexos, 6/2010

Contrary to current popular opinion, the precarious situation of public finances in Mexico is a structural issue.  It can reasonably be concluded that it is the primary deficiency of public administration of the last several decades:  it has been an intrinsic characteristic of the Mexican economy to the extent that it can be considered an endemic problem.  Since the first years of Mexican independence (from Iturbide and Guadalupue Victoria to Antonio López de Santa Anna and through the 19th century) the country has been confronted by this deficiency.  More recently, the inability to overcome this tendency represents the principal weakness of public policy, as it reduces the state’s capacity to act in all sectors.

The unsustainable fiscal situation is the deepest economic problem in Mexico.  The easiest way to see it is to imagine that all the other needed structural reforms were to happen except for fiscal reform.  With a significant fiscal reform, the others would be neither possible nor sufficient.  The systematic neglect of the nation’s fiscal unsustainability has reached extreme levels.  Mexicans want government, public services and the quality of life found in developed countries, but they don’t want to pay for them.  Given these points, fiscal reform is vitally important to the construction of “a future for Mexico.”

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Editorial: A luxury that the generation of no will not be able to give (in Spanish)

Ciro Gómez Leyva, Milenio, 4/6/2010

The calendar is inexorable.  As of today, nine sessions remain.  What will the senators and deputies do during this period for the Mexico’s future?  Little, it appears.  As things look, the best prediction would be:

• Approve the National Security Law that has been requested by the Mexican military in the past year.

• Advance the anti-kidnapping law, and possibly approve it after April 30th in a special session.

• Begin the discussion of the various projects of political reform … and possibly also complete it during the special session.

• Progress, or see what progress can be made, in the discussion of labor and fiscal reforms, which do not appear to have a path toward approval in April or the special session.  Bye, bye, see you in September.

• If the politcal work has really been done and they wove together all the agreements, the surprise would be the approval of the anti-monopoly law, sent yesterday by Calderon.

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