EconomyHerrera to Banxico and Ramírez de la O to...

Herrera to Banxico and Ramírez de la O to Hacienda: two "good decisions"

“In bad weather you have to hurry” seems to be the popular phrase that the government of Andrés Manuel López Obrador wants to apply just three days after the midterm elections, and in which his party, Morena, will have less power in the Chamber of Deputies, although it will conserve the majority.

That is why the President of the Republic decided to move his chips and

Both appointments are welcomed by the economists consulted by Expansión, as they have the necessary credentials. What is questionable, they agreed, is the urgency of the announcement made by the Tabasco politician.

For Citibanamex, the new appointments are “a very good decision that consolidates the professional and responsible management of the country’s monetary, financial and fiscal policy”, since both characters know the economic problems of Mexico.

: “That appointment is well regarded, it seems to me that it will be a very listened voice by the President”, considered Ernesto O’Farril, president of Bursamétrica.

“Definitely, this response may be a reaction to how the election results turned out and to the recognition that a different leadership is probably needed in the Treasury,” said Jessica Roldán, director of economic analysis at Finamex Casa de Bolsa.

Once the appointment is approved by the Chamber of Deputies, the new head of public finances must prepare the path for the preparation of the 2022 Economic Package, and a new tax reform.

President López Obrador asked him to work on four issues: 1) achieve a healthy fiscal balance year after year by 2024; 2) achieve economies in the use of public resources; 3) balance and improve accounts in the energy sector, and 4) see the opportunities that exist in development banking.

“I think these four axes of the tax policy are very good, I think they can play a great role in the remainder of the six-year term, they have great challenges, such as an imminent tax reform,” said the president of Bursamétrica.

Being Secretary of the Treasury, the economist must not only answer for the fiscal part, but also for the economic part, that is why “we are talking about the energy sector, and the development bank, which is practically dead, is hibernating” Ernesto O’Farril added.

New central banker

Days before the midterm elections, President López Obrador announced in his morning conference that he would nominate an “economist with a social dimension” as governor of Banxico. Since then, the name of Arturo Herrera has not stopped ringing for the position, especially when Deputy Governor Gerardo Esquivel was dismissed as governor, and when Irene Espinosa and Galia Borja said they were focused on their work as deputy governors.

For Jessica Roldán, director of economic analysis at Finamex Casa de Bolsa, the arrival of the outgoing Secretary of the Treasury to the central bank will imply a configuration in the governing board that could have a bias in monetary policy decisions.

The economist has previously ruled out that Herrera’s arrival at the central bank represents a vulnerability to Banxico’s autonomy.

“This has been an issue that has been discussed for many years because there is a history of finance secretaries who pass to Banco de México as governors: it was the case of Guillermo Ortiz and Agustín Carstens. That has been a discussion in past changes and in the end the Bank continues with the confidence of the markets and a lot of credibility “, he stressed.

In addition, with the much anticipated speculation of Herrera’s proposal, Roldán considered that it diminished a little the negotiating power of the economic package in 2022.

With the arrival of Herrera to the presidency of the Banxico Board (once it has the approval of the Senate), five of three members will have been nominated by President López Obrador, and this should not mean a threat to autonomy in the Board decisions: “I have not seen evidence that there is a management in favor of the interests of the government. In Banxico there are (Gerardo) Esquivel and (Galia) Borja, in the minutes you see their independence, which is a genuinely autonomous body, it would not have to change this with Herrera, the government has been very careful in the economic-financial part ” commented Marco Oviedo, Head of Research for Latin America at Barclays.

The congrats

After announcing the changes proposed by the president in his cabinet, the congratulations from the leaders of the financial sector did not wait.

From the headlines of the new BIVA stock exchange, through Amafore and Infonavit, on social networks there was a list of congratulations.

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