LatinFinance - March/April 2016 - 60

in June to invest around $3 billion in a
high-speed mobile network in Mexico that
would make it more compatible with US
systems. In all, the company's investments
could total $7 billion once the deal is completed.
In energy, Mexico held its first oilfield
auctions since the country nationalized its
energy industry more than 75 years ago.
The first auction, which Videgaray says
was a "learning experience," in July, drew
little participation. However, tenders have
attracted global players including Chevron,
Russia's Lukoil, Nexen, the Canadian affiliate of China's CNOOC, and France's Total.
The auctions and oilfield development are
expected to bring an estimated $7 billion in
FDI, Videgaray says.
Mexico's FDI is also a reflection of the
weakened peso, notes Kathryn Rooney
Vera, head of research at Bulltick. "Because
of the collapse in the peso, Mexico has
become more competitive and more attractive as a place for greenfield investment
and has become more attractive vis-à-vis
for example China, in terms of wages," Vera
tells LatinFinance. FDI in 2015 represents
an 8.8% decrease over the $24.1 billion of
FDI in Mexico in 2014, according to the
World Bank.
Liquidity buffers also highlight Mexico's
economic management against its peers.
In addition to international reserves, it has
a $70 billion flexible credit line with the
International Monetary Fund. The IMF
only grants these facilities to countries
with "very strong fundamentals and track
records of policy implementation," according to IMF documents.
Poland and Colombia are the only other
recipients of such IMF credit lines. The
credit lasts for up to two years and borrowers are re-evaluated each year to ensure
qualification.
Slow Recovery
The Republic of Peru's finance ministry,
led by Alonso Segura, comes in second on
this year's ranking. While the sovereign has
seen declines in FDI and revenues from falling copper prices, economists say it had a
relatively stable year in regards to slow but
growing GDP.
Inflation of 4.1%, the highest since 2008,
impeded Peru's placement at the top of
the scorecard. The Andean country's GDP
growth hit 2.7%, missing its target of 3.1%
this year. The figure, however, represents
an increase over the 2.4% growth in 2014,
and warrants some recognition during a

60 L ATINFINA NCE.COM - March/April 2016

KATHRYN ROONEY VERA
BULLTICK

"BECAUSE OF THE
COLLAPSE IN THE
PESO, MEXICO HAS
BECOME MORE
COMPETITIVE AND
MORE ATTRACTIVE
AS A PLACE FOR
GREENFIELD
INVESTMENT"

TIGHTENING BELTS: Finance Minister Luis
Videgaray says Mexico will not raise taxes,
despite lower oil prices

year when many Latin America countries,
and the region as a whole, have contracted.
Peru's efforts to de-dollarize its financial systems are particularly notable, as
they have helped to protect the sol from
sharp currency moves in 2015. Reforms
implemented in 2015 essentially aimed to
lower dollarization by cutting cash reserve
requirements for local currency deposits
and increasing requirements for dollar
deposits.
Credicorp Capital's Chief Economist
Daniel Velandia, says Peru's efforts to
decrease its exposure to dollar exchange
risk will "benefit and lessen the Peruvian
economy's vulnerability."
Foreign currency reserves totaled roughly $59 billion in January 2016, which could

help Peru cushion the impact of continuously sliding commodities prices, given the
economy's high dependence on mining and
energy. Peru holds higher reserves than
other countries in the region--Chile had
around $38 billion and Colombia had $46.7
billion of reserves in January.
Compared to Chile and Colombia, Velandia says Peru will have a better economic
recovery in 2016. Although he does not
expect significant change in market policy,
elections in April may enhance prospects
by introducing a more pro-market government.
Dependable Reserves
Chilean President Michelle Bachelet ap-
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