Mexican Officials Quitting Top Jobs With AMLO Set to Take Office

(Bloomberg) -- Key Mexico officials left the board of the nation’s central bank and the hydrocarbon regulator Wednesday amid growing concern that President-elect Andres Manuel Lopez Obrador will meddle in bodies formerly insulated from politics -- and cut the salaries of top bureaucrats.

The announcements arrived in swift succession: Juan Carlos Zepeda, who oversaw the country’s oil fields, quit after reports of pressure from incoming Energy Minister Rocio Nahle to leave. Minutes later came news that deputy governor Roberto del Cueto, one of Banco de Mexico’s five board members who decide interest rates, will depart at the end of this month. The 68-year-old cited his health.

The man known universally by his initials will take office on Dec. 1, and the Wednesday departures -- whatever their motivation -- come as many in the nation’s establishment worry they will be collateral damage as AMLO makes good on campaign promises to root out corruption, reduce violence and stop energy deals that aren’t good for the nation. A law that comes into effect in January will prohibit public-sector officials from earning more than the president’s salary of 108,000 pesos ($5,356) a month and many are leaving ahead of the change.

The resignations come after AMLO’s decision to cancel a $13 billion airport already one-third built and a push from within his party to eliminate bank fees sent the peso, stocks and bonds plummeting.

“AMLO has thrown uncertainty into the air,” said Kathryn Rooney Vera, head of global research at Bulltick Capital Markets. “If the airport is any indication of true colors or more of an ideologue presidency than a pragmatic one, then I think we’re in for negative market surprises.”

Workers are also leaving state-owned oil producer Petroleos Mexicanos at a quick clip. The company had already lost 16 percent of its work force since 2015 as managers were forced into retirement in a restructuring. It may now be facing a further brain drain even as AMLO promises to boost production, say people familiar with the situation. Some managers and senior staff members have already left, the people say, and others are expected to follow.

The central bank and oil-regulator officials who left today need to be replaced by competent technocrats, not political appointees with dogmatic views, for investors to maintain confidence, according to Alberto Ramos, an economist at Goldman Sachs Group Inc.

“From a market sentiment standpoint it will be important that the replacements are perceived to be independent,” Ramos said in an email.

--With assistance from Amy Stillman.

To contact the reporter on this story: Eric Martin in Mexico City at emartin21@bloomberg.net

To contact the editors responsible for this story: Vivianne Rodrigues at vrodrigues3@bloomberg.net, ;David Papadopoulos at papadopoulos@bloomberg.net, Stephen Merelman, Brendan Walsh

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