A $25 billion stimulus package unveiled by Mexico on Monday should have an immediate impact, Finance Minister Arturo Herrera said, as Latin America’s second-largest economy teeters on the brink of a recession.
The package comes just days before Mexico’s national statistics agency publishes second-quarter growth figures and amid an discussion over whether the economy has slipped into recession.
Mexico is targeting a primary budget surplus of 1% of GDP and Herrera said at a press conference that the package would not affect the budget. Herrera did not give projections of the impact of the package on economic growth.
“We have decided on actions that would mobilize 485 billion pesos ($25.5 billion) that would allow us to boost the creation of infrastructure projects, incentivize infrastructure investment and private consumption,” Herrera said.
Herrera said that the package would include credits, accelerating spending this year and bringing purchases of goods and services that had been scheduled for 2020 forward while also taping an infrastructure fund.
It was not clear how much of it, if any, was new funds.
“Mexico is not immune (to global headwinds) and because of this we have been thinking about starting a program that aims to help the economy,” Herrera said. “This is a series of actions that will have an immediate impact on the economy.”
The Mexican Finance Ministry said in a statement that the package would include public-private infrastructure projects including roads and urban development, while a development bank would provide loans for small- and medium-sized businesses.
A recession would be a blow to President Andres Manuel Lopez Obrador, who has rejected the notion that the national economy is facing a deep contraction.
Herrera also said that senior official Gabriel Yorio would succeed him as deputy finance minister after he took over from Carlos Urzua, who unexpectedly resigned earlier this month over disagreements in policymaking.
($1 = 19.0536 Mexican pesos)
Reporting by Anthony Esposito; additional reporting by Adriana Barrera and Sharay Angulo; writing by Stefanie Eschenbacher; editing by G Crosse and Sonya Hepinstall