LatinFinance - January/February 2018 - 28

MEXICO
ROUNDTABLE

With presidential elections on the horizon and the future of NAFTA uncertain,
LatinFinance convened a group of business executives, government officials,
investors and intermediaries to discuss the road ahead in Mexico.

Gearing up

ncertainty over the fate of the
North American Free Trade Agreement
(NAFTA) and Mexico's upcoming presidential election dominated a LatinFinance
roundtable discussion in Mexico City,
where business executives, investors and
government officials examined the road
ahead for Latin America's second-biggest
economy.
Stalled NAFTA talks and polls showing
Andrés Manuel López Obrador, a critic of
Mexico's economic reforms, as the early
frontrunner in the July election have stoked
investor concerns about growth and raised
questions about potential future investment in some of the country's key sectors.
Inflation, running at more than double
the central bank's target of 3%, is also
weighing on investor sentiment.
Edgar Olvera Jiménez, Mexico's undersecretary of communications and transportation, acknowledged the uncertainty
surrounding the economy heading into the
election. But he said that President Enrique
Peña Nieto's government is doubling down
on prudent fiscal policies and pushing
ahead with critical structural reforms and
infrastructure projects in its final months.
"The Mexican government has been
clear in sending two messages," he says.
"The first is Mexico is betting on fiscal discipline.The second is we plan to continue
pushing forward implementing structural

28 L ATINFINA NCE.COM - January/February 2018

Mexico's Undersecretary of Communications
and Transportation Edgar Olvera Jiménez

Luis Nicolau, Ritch Mueller

reforms.
"Whenever government cycles come to
an end, there is always uncertainty," Jiménez says. "We obviously have an additional
layer with the NAFTA negotiations."
Negotiators from Canada, Mexico and
the United States are expected to resume
talks in January. The previous round of
negotiations, held in Washington DC in
December, ended with some progress on
less controversial issues but left many others unresolved.
Jiménez, speaking at the roundtable in
late October, ahead of the DC talks, said
negotiations had been slowed by several
"aggressive proposals" by the administration of US President Donald Trump without
elaborating.
"The Mexican government is going to do
everything it can to reach an agreement,"
Jiménez says. "But it has to be a trilateral
agreement. It has to be fair and recognize
the interests of every party."

Analysts say the possibility of reaching
a completed deal by March, with Mexico's
presidential election campaigns underway,
appears unlikely, raising the likelihood
of volatility, particularly for Mexico's currency, the peso.
The peso slumped after Trump was
elected in November 2016, before rallying
throughout the first half of 2017. The currency is expected to remain highly sensitive
to the twists and turns of NAFTA negotiations, political noise and inflationary pressures.
Local sources
Mexican companies will likely look to complete any transactions in the international
capital markets before March, says Luis
Nicolau, a partner at the Mexican law firm
Ritch Mueller. "I think in the short term,
we'll see lots of activity."
Some Mexican companies have already
started looking at domestic financing op-

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Table of Contents for the Digital Edition of LatinFinance - January/February 2018