AMLO’s Reforms Will Be Difficult to Pass, Mexico Senate Leader Says

Mexican President Andres Manuel Lopez Obrador’s ambitious reform agenda, which includes three major constitutional amendments, faces a difficult path through a divided congress where parties have little appetite to reach consensus, Senate majority leader Ricardo Monreal said.

“It will be complicated,” Monreal said about pushing the government’s legislative priorities in the second part of Lopez Obrador’s six-year term. “I’m not overflowing with optimism, I am cautious,” he said in an interview with Bloomberg News on Tuesday.

Lopez Obrador, known as AMLO, wants to pass constitutional changes to strengthen the state utility and reduce the influence of private operators in the electricity market, reform the electoral system and embed the national guard into the Defense Ministry. Yet his ruling coalition lost the super-majority needed for such reforms in midterm elections this month, making the goal an uphill battle.

AMLO’s Reforms Will Be Difficult to Pass, Mexico Senate Leader Says

“It was a good result with some spots or stains that need to be taken care of,” Monreal said of ruling party Morena’s performance in the election. “They are timely warning calls.”

Morena lost ground in congress and in the key district of Mexico City during the June 6 vote while at the same time obtaining 11 state governorships of 15 up for grabs.

More Austerity

The president, who was one of few world leaders to avoid pushing for spending stimulus during the pandemic, is also planning to propose an administrative reform to deepen the government’s frugality, Monreal said. Mexico ended 2020 with a small primary surplus despite the economy suffering its biggest contraction in almost a century.

It will be “more austerity and more austerity,” Monreal, one of Mexico’s most senior lawmakers, said of the proposal.

In addition, he expects the AMLO administration to present a fiscal reform that will encourage investment and help moderate inflation without raising taxes, he said. The senate leader also said he is working on an economic recovery package to help small and medium-sized businesses, including with the costs of credit and savings.

Read More: Inflation Forecasts Revised, Banxico to Hold Interest Rates

Banxico Bill

Regarding a controversial bill that the senate passed last year, seeking to force the central bank to buy up excess dollars in the banking system, Monreal said the legislation is now languishing in the lower house. Although the problem is “not resolved,” the senate “won’t do anything” while the bill is still pending in the other chamber, he said.

Monreal declined to be drawn on whether he planned to run for president in 2024 amid growing speculation about AMLO’s potential successors when the president’s single-term ends.

“I’m not shying away from it, nor am I generating false expectations, but I’m going to wait for the prudent time to participate,” he said. “I’m not distracted at the moment by any activity that would precipitate or accelerate the process. We’re going to wait.”

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