EspañolCitigroup released a report following a meeting that its representatives and investors held with Mexico‘s left-wing leader Andrés Manuel López Obrador, also known as AMLO. In the statement, the bank expressed its doubts about the viability of the plan AMLO intends to implement should he become President in 2018.
Analysts from Citigroup said the upcoming election could put the country in a volatile position, made worse by attacks on corruption AMLO would carry out if he wins.
“AMLO’s presentation began strong, focusing on fiscal responsibility (zero deficits with no new taxes and redirecting spending to investment financing to generate growth). In particular, the 500 billion pesos (US $25 billion) of savings he suggests sounds aggressive.”
The bank said the fight against corruption is “clearly plausible,” but also potentially damaging to the market, as old structures would have to be broken before new ones could take their place.
Julio Zamora and Nydia Iglesias, who published the report, explained that meeting with AMLO was intended to calm markets in the face of presidential elections. “Our impression was that investors expected market policies even less friendly than those exposed by AMLO,” they said.
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The report said risks remains when it comes to the North American Free Trade Agreement (NAFTA), as AMLO insisted on defending balanced benefits for all countries involved in the trade deal. It also highlighted risks related to a new International Airport in Mexico City, due to AMLO’s reluctance to go forward with the project, which leaves the future of its financing unclear.
With nine months to go before the presidential election, Citigroup is not worried about the results despite the current situation, according to the report.
Source: El Financiero