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Monday, February 16, 2009

President Calderon Unveils Mexico’s Economic Recovery Plan

By Christa Thomas

Recession in the U.S., which buys 80 percent of Mexico’s exports, presents a risk to Mexico’s economy. President Calderon recently noted that Mexico faces a significant challenge this year as the worldwide economic crisis worsens, sapping demand for exports and threatening jobs.

In response to the economic crisis, President Calderon unveiled Mexico’s emergency measures, which are part of a 25-point economic recovery plan called The National Agreement to Promote Families’ Economies. The agreement, signed by governors, the legislative branch, social, business and workers' organizations as well as the President, is based on five key areas:

1. Supporting workers’ employment;
2. Supporting families’ economies;
3. Supporting competitiveness and small and medium-sized businesses;
4. Investment and infrastructure to promote competitiveness and employment; and
5. Encouraging actions to promote more transparent and efficient public spending.

“With these 25 measures, the federal government promises to defend household budgets and employment,” Calderon said, while pledging to inject billions of pesos into the Mexican economy.

The emergency measures include the following:

1. Infrastructure development. President Calderon has pledged to increase funds for the development of infrastructure. The National Infrastructure Program has an impressive schedule to build and modernize over 17,000 kilometers of highways and country roads, and to rebuild and repair bridges and other public-use facilities.

2. Job creation. 250,000 jobs will be created by the acceleration of several planned infrastructure projects such as road repairs, restoration of historic sites and building and repairing airports and sea ports.

3. Comprehensive cuts to energy prices. Mexico will freeze the price of gasoline this year and subsidize a 10 percent reduction in household gas prices. The plan will also lower electricity rates for businesses by up to 20 percent. Petroleos Mexicanos, the nationally owned oil industry, will receive an influx of funds to help it weather the economic storm.

4. Improved Social Security program. The government has pledged billions of pesos to help Mexicans who are unemployed or underemployed. Calderon vowed to improve the Social Security program for unemployed Mexicans, increasing from two months to six months the time they will receive medical and maternity coverage.

5. Subsidies. Calderon promised financial aid to struggling industries in a bid to save hundreds of thousands of jobs mostly in export industries that depend heavily upon the U.S. market. The federal government has pledged to make at least 20 percent of its purchases from small- and medium-size companies. He will also establish a fund to finance a “Made in Mexico” program.

President Calderon warned that Mexico would be experiencing a difficult year in terms of economic growth, investment and employment. However, he added that unlike “in the past, our economy today is much more solid and stable. And given the challenges, government will continue working tirelessly to offset the effects of the world financial crisis and overcome this situation as soon as possible.”

Sources: CNN, BBC, Bloomberg & AFP