MexConnect
Business  |  See all articles tagged finance-economics government politics real-estate

Lloyd Mexico Economic Report - October 2001

Table of Contents

STATE OF THE NATION REPORT
GENERAL GOALS
PUBLIC ADMINISTRATION
FIGHT AGAINST POVERTY
HOUSING FUNDS
EDUCATIONAL SCHOLARSHIPS
HEALTH SERVICES
ENVIRONMENTAL POLICY
RURAL PROGRAMS
TAX REFORM
INDIGENOUS AFFAIRS
FEDERALISM
SOLID ECONOMIC SITUATION
ECONOMIC CHALLENGES
FOREIGN RELATIONS AND TOURISM
LOOKING TO THE FUTURE

STATE OF THE NATION REPORT

On September 1, President Vicente Fox Quesada delivered his first State of the Nation address to Congress since taking office nine months ago. His address highlighted the progress Mexico has made during that time and the challenges ahead. Here, in the form of quotes, with emphasis on economic matters, is a summary of what he said:


GENERAL GOALS

“My Government moves forward with a clear direction, derived from a well-defined national project. The Mexican development alternative is one of modern, entrepreneurial, and socially responsible humanism. Through this, we want to bring Mexico up to date, and make her a leader among nations. With this, we want to make Mexico the success story of the 21st century.

In the face of inequality, our alternative promotes social policies, and broadens its definition by ensuring opportunities for all, the joint responsibility of those who enjoy them, and personal fulfillment, in every aspect of our lives... It seeks economic growth, but also an equitable distribution of the benefits of that growth. It promotes the development of every inhabitant of Mexico, but it also is concerned with those who have had to emigrate.”


PUBLIC ADMINISTRATION

“Today, the public administration works from within a showcase that allows citizens and the media to observe and assess everything the government does or fails to do. We give clear and timely account of how, and on what, money is spent... We are doing more with less. We have brought innovation to doing things better. We are making public administration more efficient; we are decentralizing functions and spending. In the first six months of this year, we have saved 6.8 billion pesos in current spending. And we are going to save more. In this first six months, we spent 44.9% of budgeted annual spending. This places us above the average percentage for the execution of spending in the years 1995 to 2000 : 40.9%.”


FIGHT AGAINST POVERTY

“Despite the budgetary limitations put upon us for this year, spending on the fight against poverty rose 16.% in real terms compared to the figure for 2000. We are extending the new Progresa to an extra 763,000 families, and by the end of the year will be helping to meet the needs of a total of 3.2 million families, 24% more than in 2000. With our social programs, more than 6.4 million families, 27 million Mexicans, have received encouragement and direct support to face and overcome poverty with their own labors, and with their dignity intact. This is equal to the total population of 18 of Mexico's states.

We have carried on an especially heavy war against poverty in rural areas. We are spending 28% more than last year on the new Progresa education, health, and food program. With the Social Milk Supply, School Breakfast Distribution, Monthly Shopping Basket, and Tortilla programs we are helping to feed millions of families everyday. Over these nine months, we have opened 1,345 new Diconsa subsidized grocery stores, surpassing the target set for this year by 9.3%. And in addition to all the above, we have identified 250 micro-regions in extreme poverty, which are receiving our special attention.”


HOUSING FUNDS

“Funds to finance housing will allow us to reach our goal of 360,000 loans by the end of this year. In the housing and savings program, it is our objective to grant almost 800 million pesos in subsidies, helping 33,930 families to have their own home.”


EDUCATIONAL SCHOLARSHIPS

“Our greatest commitment is to educational reform. Its intention is to increase the quantity and quality of education, defined by my Government as secular and free. We must also launch an attack, from every angle, on school dropout. This year, a budget of 251,305 million pesos was authorized for education, 6.4% greater in real terms than in 2000. We have significantly extended the coverage of scholarships through different programs.

The National Scholarships System this year will support 4.6 million students who are suffering the worst shortages. In the new Progresa, 3.6 million primary, secondary, and now upper-middle school and high-school children will be receiving scholarships. In turn, 100,000 young people will be able to continue with their higher studies at university thanks to the National Program of Scholarships and financing for education.”


HEALTH SERVICES

“We are undertaking a crusade to guarantee universal access to health, and to ensure the best possible quality, especially in rural areas. Federal per-capita spending on health increased this year from 1,386 to 1,517 pesos. Today, 8.3 million people have access to the basic package of health services. Through the new Progresa, this year the most needy families will have been given 22 million medical consultations, 13.4% more than last year.”


ENVIRONMENTAL POLICY

“It would be a huge injustice if the change that we are bringing about did not think of the generations of tomorrow just because today they have no voice. Therefore, we have taken a fundamental decision: in my Government, care for the environment is not the work of one Department; but of every single one, and the entire Government. We have placed the greatest emphasis in this regard on protecting and restoring water and the forests, classified by us as items of national security.”


RURAL PROGRAMS

“The Mexican countryside needs our special attention. We have made every effort and can release the following results today. Procampo farming support is now delivered in advance, before planting begins. To date, this program has delivered more than twice as much money as in the same period last year. Moreover, with the Program of Support for Crop Sales, funds granted are up by 121% compared to the same period in 2000. By the end of the year, the Program will have spent almost twice as much as during last year. We have put to Congress a bill to capitalize the countryside, with the injection of unprecedented resources.

We are also making BANRURAL truly a farmers' bank... Our policy is to find solutions together with farmers through the National Agricultural Council, to the problems of prices, markets and value added; and to support the development of the rural sector through shared responsibility and social mediation, allowing us to build a democratic relationship with all players in agriculture.”


TAX REFORM

“Together, we must overcome the hurdle of the shortage of federal, state and municipal resources, to bring our country up to date, and improved the quality of life of Mexicans. Fulfilling my duties, I submitted to the Congress of the Union a bill for a New Distributive Public Treasury, and we are working together on this piece of legislation.”


INDIGENOUS AFFAIRS

“The Congress of the Union approved the Constitutional Amendment in the Matter of Indigenous Rights and Culture. In addition, programs have been launched under the headings of investment, development, and attention for the most pressing needs of indigenous communities.”


FEDERALISM

“The shortages and shortcomings in the states and municipalities of Mexico do not wear party colors. Neither do their solutions reflect bias. This has been made fully clear in fiscal matters. Today, of every peso collected by the federal government, 60 cents are administered, spent, and invested directly by the states and municipalities. In only eight months of this year, we have appropriated more than 282 billion pesos, 15.7% greater than last year... We shall continue to make determined progress in this direction, the direction of federalism.”


SOLID ECONOMIC SITUATION

“There is no escaping the fact that our economy is closely linked to the main locomotives of the world economy, many of which today stand still. However, thanks to a responsible economic policy, and the trust of domestic and foreign investors, we have been able to lessen the negative impacts which in other times saw our economy collapse. The foundations are there to successfully protect ourselves from the risk of infection by the financial crises affecting sister countries, and to ensure the orderly recovery of growth.

The Mexican economy today enjoys inflation rates not seen since 1970. Direct investment for the first half of this year is expected to exceed 6.7 billion pesos. The market expects inflation for this year to be lower than 5.5%. This economic strength can also be seen in the fact that interest rates have reached a historic low, as well as in the soundness of the peso, and moderate current-account deficits financed with direct foreign investment; in the amount of international reserves and assets which August 28 stood at almost US$39 billion; and in the reduction of the country-risk to investment.

Wages are recovering their buying power. As a result of the 10.4% increase in collective bargaining wages and the reduction we have achieved in inflation, average real salaries for the manufacturing sector to June of this year were 6.3% higher in real terms than in the same month of 2000. These indicators will prove invaluable to guaranteeing a stable course and a speedy and healthy recovery for the Mexican economy.”


ECONOMIC CHALLENGES

“Beyond all these positive factors, we acknowledge the problems caused by unemployment and a lack of growth. We are working closely with the most affected states and sectors to moderate the impact of the economic downturn. This was the goal underlying the Program to Strengthen the Economy, which concentrates on three fronts:

First: to promote the competitiveness of the industrial base, by eliminating obstacles to the creation of companies and jobs; by implementing without delay public-sector investment projects, by promoting the construction of housing; and by increasing financing for small and medium-sized businesses.

Second: to boost the internal market, by eliminating the evasion of customs duties and by fighting the unfair competition that displace our own goods; and also through encouragement by means of government purchases directly from micro, small and medium-sized businesses. Third: to maintain strict fiscal discipline, by applying austerity measures and savings programs in public-sector spending.”


FOREIGN RELATIONS AND TOURISM

“Mexico today has impeccable democratic credentials giving new strength to our voice in international forums... We have successfully led efforts to promote our economy abroad, especially in trade and investment. Flows of direct foreign investment amounted to 6.774 billion dollars in the first half of this year, a historic high. Revenue from foreign tourism arrivals also reached historic levels. Between January and June, Mexico was visited by 10.8 million people. These tourists contributed 4.702 billion dollars to the economy, 8.% more than in the same period last year.

We opened new channels for cooperation with Europe, Asia, and Latin America, and sustained and even broadened prospects for work with the United States and Canada... Given Mexico's irrevocable commitment to her sons and daughters living abroad, we have asked the government of the United States of America to consider an immigration agreement to grant those Mexicans currently living in the U.S.A. without the required papers a legal status, and to allow opportunities for those who would seek other employment there.”


LOOKING TO THE FUTURE

“Mexico today is making determined and stable progress down the road of change; she is united and working hard... The economy is being managed responsibly and effectively, reducing the impact of the international economic slowdown on Mexico. Social programs are strengthened, on new foundations...

We need a legal framework to promote a new labor culture; a new framework that will give us a relationship of mutual respect and trust among workers, authorities, and businessmen; one that will boost the efficiency and productivity of our economy, and above all strengthens and ensures the recovery of wages.

There are other areas where we must also bring the country up to date by way of structural reforms, such as energy, telecommunications, and the countryside, that would allow us to make our economy more efficient and productive... We must not slowdown. Let us continue to see the future from a present of hard work and optimism; commitment and hope.”

Mirrored with permission from Lloyd S.A. de C.V.
See their Page on Mexico Connect.

2001 Operadora de Fondos Lloyd, S.A.
© 2001 Allen W. Lloyd, S.A. de C.V.

Published or Updated on: July 20, 2001
All Tags