Mexico’s government presented an almost $14 billion infrastructure investment plan on Monday as President Andres Manuel Lopez Obrador seeks to repair rocky relations with business leaders and lift the struggling economy.
The package, mostly privately financed, is the first clear sign of corporate bosses’ readiness to invest under Lopez Obrador since the coronavirus pandemic plunged Latin America’s no. 2 economy into its biggest slump since the Great Depression.
Ranging from a concession to revive a planned train link between Mexico City and the central city of Queretaro, to investments for state oil firm Petroleos Mexicanos (Pemex), the raft comprises some 39 projects, the government said.
Unveiling the plan, worth over 297 billion pesos ($13.83 billion), at a news conference, Lopez Obrador extended a hand to corporate bosses with conciliatory language.
“We have no problem with business leaders. On the contrary, they deserve our utmost respect and admiration because they invest, generate jobs and create welfare,” he said alongside some of Mexico’s most prominent industry chiefs.
Since taking power nearly two years ago, Lopez Obrador has had a choppy relationship with business, angering companies and allies of Mexico by threatening to tear up contracts worth billions of dollars signed under the previous government.
The leftist Lopez Obrador insists that past governments were permeated by corruption and skewed the economy in favor of private interests, particularly in the energy sector.
The resulting chill in investor confidence that set in helped to tip Mexico into a mild recession in 2019 before the pandemic battered the global economy.
Seven of the projects were already underway, while the remainder were to be started between this month and the end of next year, the government said in a presentation. Those fronted by Pemex were earmarked as “strategic alliances”.
Among the private companies leading pending projects was Impulsora del Desarrollo y el Empleo en America Latina (IDEAL), a builder controlled by Mexican billionaire Carlos Slim.
This year, leading forecasters expect Mexico’s economy to contract by up to 10% or more. Lopez Obrador has resisted calls to splash out to counteract the effects, keeping a tight rein on public purse strings to avoid going into debt.
Industry sources familiar with discussions on the projects said the president is increasingly conscious that he needs private sector investment to realize his economic goals.
Monday’s investment package was the first of what business leaders say should be a series of investment announcements.
The initial batch should create some 185,000-190,000 jobs, said Jorge Nuno, a senior finance ministry official.
Among the biggest projects listed were plans to improve the refining potential of Pemex, which Lopez Obrador has put at the center of his drive to create a more mixed economy.