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Mexico To Gain Additional Investments With New Financial Tools

06 September, 2015

As Mexico unveils its budget for the coming year,austerity measures may reflect current oil prices,but President Enrique Peña Nieto has announced the nation will be nicely positioned to rely on help from a variety of new financial tools to boost additional investments in key areas,reported the Wall Street Journal.

“Mexico will be developing innovating financial instruments that will allow us to capture more capital inflows… and to direct them to infrastructure projects,” stated Peña Nieto in his annual state of the union address last Wednesday.

The President revealed the government will issue education infrastructure bonds to obtain $3 billion from investors over the next three years in a bid to improve public schools throughout Mexico. The funds will complement the nation’s existing education budget and supports the recent major overhaul of the entire education sector.

Peña Nieto also announced the government will unveil new types of investment trusts on the Mexican stock exchange,with revenues going to fund upcoming energy and infrastructure projects.

“Local pension funds,insurers and other investors could put money into the trusts,mirroring the recent success with Mexico real estate investment trusts (REITs),which are known locally as FIBRAs,” writes the Wall Street Journal. 

In a move that is right in line with Mexico’s consistently sound fiscal policies,the 2016 budget that Finance Minister Luis Videgaray will reveal this week is expected to contain major cuts in spending to narrow the deficit,totaling about $8 billion in spending. Still,Peña Nieto has confirmed this will be accomplished without raising taxes,creating new taxes or increasing public debt. 

“It is no time to start from zero or improvise,” Peña Nieto stated. “We will keep building on the foundations laid in the first half of the presidency.”

This marks the halfway point in his six-year term and the president also confirmed that his two main aids,Videgaray and the interior minister,will both remain in their positions. Peña Nieto also confirmed that the second half of his presidency will be focused on speeding up the implementation of the may legal reforms that were passed during the first two years of his tenure. Examples include the education overhaul and opening up the energy sector to outside investment and exploration for the first time in more than 75 years.

“The government will also seek to pass in Congress legislation to create new anticorruption institutions independent from the government,” reported the Wall Street Journal. 

The 2016 federal budget will also include measures designed to create special economic zones that will encourage investment in Mexico’s poorest states,with additional incentives to promote development and employment,as well as to create a new ministry of culture.

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