Agustín Carstens announced that President Peña Nieto had asked him to postpone his departure as head of Banco de México from April until November, and that he had agreed. Given the lack of a clear successor to head the Bank, the delay will provide some additional financial stability through the gubernatorial elections in June and the 2018 budget approval process in September-November.
In a break with tradition, newly-appointed Banco de México Governor Agustín Carstens invited Finance Secretary Ernesto Cordero and Undersecretary Alejandro Werner to attend the Bank’s first policy meeting of the year. In addition, the Bank and Ministry of Finance jointly announced a decision to start accumulating international reserves. Noted columnist José Yuste, “This would be the first large scale joint operation between the Bank and Hacienda, inaugurating a new relationship between Carstens and Cordero, together with President Felipe Calderón himself. People speak of an understanding which remembers that the central bank is an institution of the federal government.” (Excelsior 1/27)
The key economic policymakers, in their new roles, gave similar perspectives on the economy in back-to-back presentations at the ITAM’s annual economic conference. Banco de Mexico governor Agustín Carstens said that the economic recovery that began in the second half of 2009 will continue, and that any increase in inflation that resulted from higher taxes and increased fuel prices was likely to be transitory and not require a policy response from the central bank. Finance Secretary Ernesto Cordero emphasized the positive contribution from the government’s reform initiatives: the liquidation of Luz y Fuerza, the energy reform, the liberalization of investment rules for pension funds, and the modernization of public-private partnership investment rules. The consensus outlook for 2010 is economic growth of about 3%, and inflation of about 5%.
Their presentations may be found on the Hacienda and Banxico websites.
As expected, the Senate confirmed Agustín Carstens as the next governor of the Banco de México. The vote was 81-19, with the PRD, PT, and Convergencia voting against.
Posted in Economy
Breaking a long silence, Banco de Mexico governor Guillermo Ortiz said he would be willing to serve a third term as head of the bank: “If the President and the Congress think that I can continue to be of service, I will do so with great pleasure; I will never say no to Mexico,” Ortiz said. The President is expected to make his nomination, which must be ratified by the Senate, this week. Calderón has been believed to have a clear preference for putting Agustín Carstens in the central bank, with Ernesto Cordero taking over at the Ministry of Finance. However, as columnist Salvador García Soto noted, the trial balloon of Cordero’s name “was not well viewed by Congress—particularly by the PRI Senate delegation—or by influential Wall Street voices who lack knowledge of the current Minister of Social Development.” (Universal 12/3, 12/5)
Finance Minister Agustín Carstens responded vigorously to the comments made earlier in the week by Nobel prize winning economist Joseph Stiglitz. Speaking at a conference in Mexico, Stiglitz said that Mexico’s response to the global financial crisis had been “unusual” with a “relatively weak” fiscal stimulus in contrast to the actions of many other countries. He added that Mexico needed to diversify its exports, and that relying on economic recovery in the U.S. was unlikely to result in a strong recovery since the world’s growth is concentrated in Asia. Stiglitz also said the government need to invest not only in infrastructure but also in technology, education, and programs for improving economic opportunity. Carstens responded by noting that the government had to respond to the twin crises that hit Mexico–the global recession and the 800,000 b/d decline in oil production. “We did not have the option of contracting more debt. One has to act responsibly, and this is what President Calderón decided and did,” Carstens said. Economy Secretary Ernesto Cordero said that Stiglitz “needed to read a bit more on Mexico” before making comments. The Templo Mayor column observed: “Wow. Looks like the Minister of Finance has decided to celebrate the anniversary of the Revolution by shooting at Nobel Prize winners.” (Universal 11/19, 11/20, Reforma 11/20)