MEXICO CITY, March 19 (Reuters) - One of Mexico’s most powerful business lobbies on Thursday asked the government to drop its ambitious primary budget surplus target to free up resources and suggested taking on debt if necessary to shield Mexicans from the economic pain of the coronavirus.
The leftist government of President Andres Manuel Lopez Obrador is targeting a primary budget surplus, a figure which strips out payments on existing debts, of 1% of gross domestic product (GDP) to prove responsible fiscal management.
“At this time of unprecedented challenges, the government must abandon its primary surplus target of 1% of GDP. The freed up resources must be used to support the revival of the economy. If necessary, take on debt in a responsible way,” the Business Coordinating Council (CCE) lobby said in a statement.
Mexico is already in a mild recession and Credit Suisse now forecast real GDP will shrink 4% this year, compared with a previous estimate for 0.7% growth, as the coronavirus pandemic ravages supply and demand around the world.
“Internationally, the damage to the real economy is already visible on the supply side, as trade and the activity of production chains are interrupted. Domestically, for now the problem is primarily one of aggregate demand. Therefore, measures should focus on strengthening it,” the CCE said.
Its proposed measures include relaxing the primary budget surplus target, ensuring liquidity, stimulating private consumption and investment, boosting consumption and investment in the public sector and giving positive signals to international markets.
The CCE also urged to speed up past due payments to suppliers of state oil firm Pemex and state power utility CFE.
“The payment of debt to suppliers for products and services already delivered at any of the three levels of government, federal, state or municipal, is urgent,” it said. (Reporting by Anthony Esposito; Editing by David Gregorio)