[OPE-L] Obrador Vows Fiscal Caution

From: glevy@PRATT.EDU
Date: Tue May 24 2005 - 14:13:53 EDT

This relates to our discussion. Via Joseph Smith and
GloboList@yahoogroups.com./ In solidarity, Jerry

 From Obrador's interview with the FT.
*  public spending will be financed not by debt or extra taxation,  but
by $10bn in spending cuts.
*  independence of central bank will be maintained
*  will stimulate growth "primarily through investment in the
construction industry
*  rules out any renegotiation of the NAFTA
*  reform management structure of Pemex instead of privitization

FT's conclusion:  Obrador will be more like Lula than Chavez.

Mexican frontrunner vows fiscal caution
By John Authers, Richard Lapper and Sara Silver in Mexico City
Financial Times, May 24 2005

Andrés Manuel López Obrador, the leftwing frontrunner for Mexico's
presidential contest next July, has made a strong attempt to define
himself as an economic pragmatist, arguing that he would maintain  both
a cautious fiscal policy and central bank independence if elected.

In an interview with the Financial Times, he said extra public
spending would be financed not by debt or extra taxation, but by
$10bn in spending cuts equivalent to an 8 per cent reduction in real
terms  in his first year in office.

A clampdown on rampant tax evasion would generate resources, claimed
Mr López Obrador. Mexico raises only about 50 per cent of what it is
owed by taxpayers.

  "Macro-economic balance has to be maintained," says Mr López
Obrador, who is mayor of Mexico City. "It is just common sense. Whenever
there  is economic instability it always hits people who have least."

He said he would stimulate growth "primarily through investment in
the construction industry", which would have a "multiplier effect" on
the  economy.

  There was governmental waste to eliminate. "Just look at how much
supreme court judges are paid in Mexico," he said. "We are talking  about
$30,000 a month. I think that they earn more than any equivalent
official anywhere else in the world. Then add on the secretaries,
consultants, helpers it's serious costs."

  Mr López Obrador ruled out any renegotiation of the North American
Free Trade Agreement (Nafta) with the US and Canada, even though he  has
fiercely criticised it. "We are talking about asserting our rights  within
the treaty. We aren't talking about attempting to change the  treaty," he

  The statements indicate that Mr López Obrador would pursue an
approach to economic policy more like that of Brazil's leftwing President
Luiz  Inácio Lula da Silva than that of Venezuela's President Hugo Chávez,
 in appeasing businesses concerned by his leftwing rhetoric and
occasionally autocratic style.

  He did not name his economic team--Lula did so during his campaign.
But he said he would appoint only candidates with technical economic

  Mr López Obrador has consistently led opinion polls on next year's
presidential election since the first surveys in late 2002. But his
chances have improved since the abandonment last month of an attempt  to
impeach him for an alleged contempt of court in a planning dispute.
According to polls he now enjoys an advantage of between 12 and 17  points
over his nearest challenger.

Mr López Obrador ruled out privatising the cash-strapped energy
industry, dominated by Pemex, the state-owned oil company.

Instead, he would reform Pemex's management structure and allow it
to keep more of its profits for re-investment through austerity measures
and by saving money elsewhere in the federal government.
Privatisation was "unnecessary" because "this is a profitable business".

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