March 12, 2020 / 6:37 AM / 21 days ago

UPDATE 1-Mexico must minimize coronavirus economic drag, finance minister says

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By Anthony Esposito and Abraham Gonzalez

ACAPULCO, Mexico, March 11 (Reuters) - Mexican policymakers need to implement economic measures that can minimize the expected economic headwinds caused by the spread of the coronavirus before the crisis worsens, the finance minister said.

Finance Minister Arturo Herrera told Reuters in an interview late Wednesday that the government is determined to get ahead of any damage to the economy and soften the expected blow.

“What’s clear to us is that if we want to have a stimulus that boosts the economy in a timely manner, what we have to do is start that now, and not when we are at the height of the coronavirus crisis,” Herrera said.

He said the government is finalizing a plan to attract new investment in the energy sector, even as adverse financial market conditions mean that international oil auctions open to private producers are not under consideration.

The administration of President Andres Manuel Lopez Obrador is taking a cautious approach to possible measures to contain the spread of the highly contagious virus, such as mandatory school or business closings, because of the economic harm they could cause, Herrera said.

He pointed to the big hit to the Italian economy that could result from recently announced containment measures by that country’s government.

“When a country decides to close schools, close restaurants, close movie theaters, or decisions like those taken by Italy now, it’s clearly going to have a major impact on the economy,” he said.

He added that if such measures “must be taken,” Mexican health authorities will make the final determination.

Herrera, in the job since his predecessor resigned last July over disagreements with Lopez Obrador, said government agencies must purchase all necessary medicines and other equipment to combat coronavirus, and speed up spending on public health.

Mexico has reported 8 cases of the virus so far, among over 45,000 worldwide. But its manufacturing sector is vulnerable as the outbreak disrupts shipments of key parts and components from other countries such as China, while a growing number of global travel restrictions could curb tourism. (Reporting by Anthony Esposito and Abraham Gonzalez; Writing by David Alire Garcia; Editing by Kim Coghill and Gerry Doyle)

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