Mexico Passes AMLO’s Austerity Law Curbing Excessive Spending

(Bloomberg) -- Mexican lawmakers on Tuesday approved President Andres Manuel Lopez Obrador’s sweeping “austerity law” that seeks to end excessive spending by government officials while also banning work in the private sector within 10 years of serving as a regulator.

Lower house lawmakers voted to approve the bill, in general, but debated into the night over several articles. The bill had already been approved by the Senate and, if no changes are made, it will be sent to the president to be signed into law. Lopez Obrador’s Morena party, which holds a majority in the lower house with its allies, backed the reform while opposition lawmakers voted against it.

AMLO, as the Mexican president is known, won a landslide election last year promising to stamp out corruption. He slashed his own salary, capped government wages and put the presidential plane up for sale in favor of flying commercial.

The austerity law enshrines cost-saving measures designed to end government privileges and cracks down on the revolving door between public service and the private sector that AMLO has described as a “cancer.”

The legislation would prevent any high-level official from working at a company that they had regulated for 10 years, one of the longest such “cooling-off” periods anywhere.

“The quality of the public servants that will remain will be really bad,” Fernando Galindo, a lawmaker from the former ruling Institutional Revolutionary Party, said before the vote.

Morena Senate leader Ricardo Monreal said in an interview last month that lawmakers may present a reform measure to scale back the waiting period.

In the weeks ahead of the vote, half a dozen top officials quit at the national banking and securities regulator, including those in charge of certifying licenses of 85 new financial technology companies, according to current and former officials with knowledge of the resignations. They requested anonymity since they were not authorized to speak with the media. The immanent approval of the law was a top reason for quitting, the people said. The officials who resigned did not respond to requests for comment.

Salary cuts have already sparked an exodus from government agencies and some officials are planning to resign before AMLO signs the austerity bill into law.

The legislation also bans a wide array of practices, including the creation of special government trusts that have been criticized for their lack of transparency, the remodeling of offices for “aesthetic“ reasons, buying government cars priced over $19,000 and generous pensions for ex-presidents.

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