Macroeconomic Stability: A Comparative Advantage for Mexico
by Enrique de la Madrid *
Director General
BANCOMEXT
On January 30 of this year, the Ministry of the Treasury announced preventive cuts to public spending in the face of drastic reductions in oil prices and the expectation that prices will continue to fall during 2016, as well as international financial instability associated with the expected increase in US interest rates and the worldwide economic slowdown.
For 2015, fiscal income is ensured due to the fact that the federal government took out oil price coverage to the value of 73 dollars per barrel, as well as through income obtained from gasoline sales. Additionally, it is expected that economic recovery in the United States will have a favorable impact on our non-oil exports, which are our main economic driving force.
Three decades ago, Mexic had an oil-based economy with a high-level of foreign debt, based on the expectations of income from oil exports. However, in 1981 a sharp fall in oil prices drastically limited our ability to meet our debt obligations, leading to the creation of a deep financial and economic crisis and chaos in the exchange rate.
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*Translation provided by Nuricumbo + Partners
It is an honour to be visiting the United Kingdom at the invitation of Her Majesty Queen Elizabeth II. The positive influence of this great country has nurtured Mexican culture for nearly two centuries, so my visit represents one more step in the never-ending journey to tighten our bonds. Paraphrasing Sir Winston Churchill, it adds to the joy and glory of the path we have embarked upon together.
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