Mexico’s AMLO administration unveils first budget with focus on anti-corruption and welfare
Mexico’s government will present its preliminary three-year budget today, the first under recently elected President Andres Manuel Lopez Obrador (AMLO).
Though AMLO has pledged to end the nation’s corrupt systems and bring economic stability back to the lower and middle classes, investors are wary that his promise to increase pensions and cut taxes will erode last year’s budget surplus.
It is unclear how AMLO will fulfil expensive promises to the Mexican people without reneging on his pledge of fiscal discipline. Though he claims that cracking down on corruption will pay for the expansion of welfare and subsidies, details of this plan remain vague.
While you can expect today’s budget to prioritise funding public infrastructure and education programs, AMLO is unlikely to risk turning Mexico’s surplus into a deficit. Doing so would further destabilise the country’s markets and shake investor confidence in his presidency.
Instead, cuts in public salaries (including his own) to fund short-term projects are likely. In the long-term, expect AMLO to continue pursuing a delicate balance of market-friendly policies such as lowering taxes while also increasing public welfare programs, with his chance of success uncertain.
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