LatinFinance - January/February 2013 - 72

Parting Shot

A vision of reform
Mexico has a rare opportunity to transform its economy – and now is the time to seize it, says its
finance minister Luis Videgaray

he Pact for Mexico is a broad political agreement to carry
out some significant changes in public policy, particularly
in economic policy, to make some changes that we all know
need to be made on the fiscal side, in energy and in competition,
to name a few, that are long overdue.
It is an important achievement to have an
agreement. But the true achievement will be
to make it happen. So therefore, the Pact for
Mexico is an opportunity. We want to seize
that opportunity.
The Pact is based on the belief that we
need to create a more equal society. Mexico
is not the poorest country in the world, but it
is one of the most unequal. The distribution
of income in Mexico is something that is
common to many Latin American economies.
We need a minimum base of social benefits
that are universal, meaning that they are
available to all: a minimum pension for
retirement, an unemployment insurance and
universal health coverage are the basis.
The government and the main political
parties agree that this is a desirable goal. It
will take a lot of work to do that. We need
to provide the budgetary support for this to
happen. That’s where the fiscal reform comes
into play.
President Peña Nieto believes in the
market economy as a way to create wealth
and to promote development, to create
better jobs. But it cannot only be the market
economy: we need to create a basic safety
net to make sure that all Mexicans have a
minimum base of benefits.
This not just a marginal twist in the fiscal
regime. We need to do a true overhaul of our
fiscal structure in order for this to be possible.
It’s very clear from the Pact, 44 of the goals are explicitly subject
to a fiscal reform happening.
The fiscal reform needs to achieve at least three objectives.
One is to have a simpler system that fosters competitiveness in
the Mexican economy. Second, it needs to be a fair fiscal reform.
A third feature is reconstructing the financial capacity of the
state as a whole, not only the federal government but also the
states and municipalities.

All of us are alert to the importance of doing this, and of the
cost of delaying a fiscal reform. The consensus is much broader
that this is something that needs to be done. The political
environment is very constructive: it’s a major innovation to
have the opposition parties approach
the government and seal a pact to work
together on important and some difficult
matters. The political environment will help
significantly.
Not only the opposition, but more
importantly, society as a whole needs to
understand why we need to enhance the
financial capacity of the government and the
Pact is very clear on what the uses of those
regional revenues will be.
The Pact includes the topic of energy
reform and we will definitely push this
forward. Pemex is a very good company
at doing some things but has not enough
experience or expertise at doing some
others.
We have a tremendous opportunities in
the energy sector. Pemex needs to team with
other players in the international energy
arena that can bring capital and expertise so
that’s the key of the reform, to allow Pemex
to partner with such players.
We are not thinking of Pemex to be
privatised and we are not thinking about
selling reserves. It’s about allowing Pemex
to act more as a company and to be a true
global player that can partner and cooperate
with others in these huge opportunities that
are in front of us.
We are obviously enthused by the
financial market reaction at the start of the
government, it’s something we acknowledge
and appreciate. But that’s not our ultimate goal. Our goal is to
do fundamental things in the Mexican economy to keep Mexico
as a stable, growing economy and we think that the odds are
good for that so long as we keep doing our jobs.

“Pemex needs to team
with other players in the
international energy
arena that can bring
capital and expertise”

72 LatinFinance

Parting Shot option2 (COLOR).indd 72

Luis Videgaray Caso is Mexico’s Secretary of Finance. He
was interviewed by Taimur Ahmad. Read the full version
online at www.latinfinance.com

January/February 2013

1/10/13 10:53 AM

http://www.latinfinance.com

LatinFinance - January/February 2013

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