AMLO’s mess in Mexico
The resignation of Mexico's finance minister has cast a shadow over Andrés Manuel López Obrador (AMLO), Mexico’s “leftist firebrand” leader.
The business community has always been wary of Andrs Manuel Lpez Obrador (AMLO), Mexico's "leftist firebrand" leader, says Ian Bremmer in Time.
Yet concern about his policies was tempered by a grudging respect for his commitment to "fiscal discipline and general macro stability". That had been underlined by his decision to hire the "widely respected" Carlos Urza as finance minister. Yet Urza resigned last week, firing off a "blistering" letter that lashed out at dubious appointments and "extremist" economic policies. The Mexican peso fell by 2% against the US dollar.
It looks as though "powerful members of the left-wing government are pushing for looser fiscal policy", writes Edward Glossop for Capital Economics. The central paradox of AMLO's administration has been that it wants to pay for "ambitious social programmes" while not increasing debt, adds Elisabeth Malkin in The New York Times. It said it would find the extra money by rooting out corruption, but in practice the finance ministry has been making deep cuts to non-priority areas, such as higher education, to balance the books.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The trouble now, says John Authers on Bloomberg, is that Urza's broadside will fuel suspicions that the new president is "an extremist prone to appointing cronies". Downgrades to the country's debt look "very likely".
Sign up to Money Morning
Our team, led by award winning editors, is dedicated to delivering you the top news, analysis, and guides to help you manage your money, grow your investments and build wealth.
Alex Rankine is Moneyweek's markets editor
-
Government sells another £1bn in NatWest shares as full privatisation edges closer
The UK Treasury's stake in NatWest has fallen to just over 11% - here is what it means for the share price
By Chris Newlands Published
-
Why the MoneyWeek ETF portfolio won't need to change
Our long-running ETF strategy won’t be placing any bets yet about what Donald Trump will do in his new term
By Cris Sholto Heaton Published