EconomyThe legacy that Arturo Herrera leaves in the Ministry...

The legacy that Arturo Herrera leaves in the Ministry of Finance

Once Arturo Herrera leaves the command of the Ministry of Finance, next July, he will be remembered as the official who left Mexico’s public finances in balance in the face of the COVID-19 pandemic, despite the actions to achieve the desired balance financial services can pass a costly bill to the national economy in the medium term.

Herrera will leave his post with the aim of presiding over the Governing Board of Banco de México (Banxico) as of January 1, 2022 and it will be the economist Rogelio Ramírez de la O who will occupy the position to fight one of the most important battles in the world. government of Andrés Manuel López Obrador: the tax reform.

In addition to that it will design the economic package 2022 when the reactivation of the productive sector still seems to be weak.

The legacy

“On the fiscal issue, Secretary Herrera tried to make a good distribution of public resources. He delivered inexpensive packages with reallocations in expenses with very low margins. In addition, Mexico issued green bonds, it innovated in this regard, but in terms of countercyclical measures to face the pandemic, more could be done. Although we also know that he is not the one who has the last word, “said Alejandra Macías, a researcher at the Center for Economic and Budgetary Research (CIEP).

After the resignation of Carlos Urzúa, President Andrés Manuel López Obrador appointed Arturo Herrera as Secretary of the Treasury in July 2019, for which he was in charge of the design of the economic packages for 2020 and 2021.

In 2020, the coronavirus pandemic arrived in Mexico and, given the decrease in the collection of taxes by economic activity, the federal authority made more efficient the methods for the inspection of debtors with the Tax Administration Service (SAT), resources were also used in funds such as the Budgetary Income Stabilization Fund (FEIP) and the Federal Entities Income Stabilization Fund (FEIEF) . It also began with the extinction of trusts.

Unlike other countries, Mexico did not resort to contracting debt to provide resources for social programs and was the Latin American country that allocated the lowest percentage of GDP to provide support for the pandemic, with only 0.7% of GDP, when in The average for Latin American countries was 4%, according to IMF data.

“On the one hand, they recognize your work, but while you already have 8 million more people in poverty, small and medium-sized companies that ceased to exist, this in the future, in the long term, reduces your economic growth and productivity. It would be necessary to make a cost-benefit analysis of this type of decision, ”said Alejandra Macías.

Unlike Luis Videgaray, during Enrique Peña Nieto’s administration, Herrera went through a very difficult situation, but one that he faced very well, said Iván Franco , founder and director of the consultancy Triplethree International.

“It is an issue that is in favor of softening the effects of the crisis, you win in a part that in this case was the fiscal balance, but at the cost of fewer companies, less employment,” said the specialist.

Challenges

Now, facing the new appointments and positions, Ramírez de la O has great challenges, the first is the design of the 2022 budget that must already come with a fiscal reform to guarantee and boost the arrival of resources to the public coffers, Franco considered.

It should be noted that the way in which the lack of public resources was settled was with non-recurring funds and resources, which is why a tax and fiscal reform is necessary to increase and boost the generation of resources through taxes.

According to Ramírez de la O, his administration will focus on four major aspects that give continuity to Herrera’s actions and decisions: to achieve a healthy fiscal balance year after year by 2024; achieve economies in the use of public resources; balance and improve accounts in the energy sector, and see the opportunities that exist in development banking.

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