AMLO Warns Mexican Central Bank Over Business Lending Program

(Bloomberg) -- President Andres Manuel Lopez Obrador said that the central bank should ensure that emergency credits granted to businesses be withheld from companies that had problems even before the coronavirus pandemic hit.

In a Monday morning press conference, the president said that if the loans blow out the budget deficit, he would not accept them.

Banco de Mexico’s program to lend to crisis-hit businesses is independent from the central government and won’t directly affect the federal budget. Still, Lopez Obrador warned that his government will monitor the lending agreements closely, and said that it should only go to smaller companies.

“We have to be careful with Banco de Mexico support,” he said. “We will be watching.”

The president also took issue with a $12 billion loan program set up by IDB Invest, the private finance arm of the Inter-American Development Bank Group. Lopez Obrador said that the government would not give its approval and called the initiative an imposition.

“I don’t like the way that they reach agreements and want to impose their plans,” he said.

The program is meant to fund 30,000 micro, small and medium-sized firms and was made after an agreement with the Mexican business group Consejo Mexicano de Negocios (CMN).

CMN chief Antonio del Valle said on a conference call later on Monday that the president had “misunderstood” a question about the private sector loan program. IDB official Tomas Bermudez said on the same call that no public resources were being used in the program and that it did not require specific approval from the government.

Lopez Obrador has so far resisted calls for large fiscal stimulus programs of the type announced by other governments across the region, or company bailouts to support the Mexican economy amid the spread of the coronavirus and a slump in oil prices. He has rejected any bailouts for big companies and says that he intends to defend Mexico’s fiscal position.

“We do not want to put the the country into debt. We want to rescue the neediest first,” Lopez Obrador said.

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