Mexico’s New Finance Minister Pledges to Keep AMLO’s Austerity

(Bloomberg) -- Mexico’s new Finance Minister Rogelio Ramirez de la O pledged to maintain the country’s austerity, making a better use of the its resources instead of increasing the debt burden, according to a statement as he took office Friday.

Ramirez, a longtime ally and third Finance Minister of President Andres Manuel Lopez Obrador, begins what in Mexico is considered the most influential cabinet role with the goal of obtaining a level of independence his predecessors didn’t attain. He committed to continuing Lopez Obrador’s policies while keeping healthy fiscal accounts, rein in the billions of dollars in debt of state-owned oil company Petroleos Mexicanos and prepare a multiyear financial plan through 2024.

The new minister “emphasizes an optimal rationality in the use of public resources before drawing on more debt,” the statement from his office read. “In the phase starting now, the Finance Ministry will be more involved in the accounts of the energy sector and in empowering the development banks.”

Latin America’s second-largest economy is rebounding faster than expected with strong U.S. demand propelling the manufacturing sector after AMLO, as the president is known, refused to provide significant fiscal stimulus last year. The government projects that gross domestic product will grow 6.5% in 2021, coming back from a 8.2% plunge last year, the most in almost a century.

Read More: Mexico Economy to Advance 1.7% in 2Q Amid Abating Shocks

People familiar with Ramirez’s thinking told Bloomberg News last month he wanted to speed up growth via additional debt-fueled public spending -- an aim that could put him at odds with the austere president. Since Ramirez’s nomination, the president has again vowed not to take on more debt.

Arturo Herrera, who stepped down as finance minister Thursday and was seen as a loyal executor of the president’s ideas, has been nominated to head the country’s influential central bank.

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