fbpx

Peña Nieto projects an economic expansion of 3.5 percent in 2013

Mexico’s president, Enrique Peña Nieto proposed a sweeping overhaul of the banking sector Wednesday to make credit cheaper and more available, a move desperately needed in a country where bank loans represent less than 20 percent of GDP – one-tenth the level seen in the United States.

“The goal is for banks to loan more, and loan more cheaply,” said Peña Nieto, “because access to credit can change a person’s life, giving them access to durable consumer goods, their own property and a way out of the informal economy.”

The plan would encourage banks to compete and lend more, create incentives for mid-size companies to list shares on the stock market, and modify bankruptcy laws to make it easier for lenders to seize debtors’ assets.

Economists estimate that one-quarter to one-half of Mexicans work in the “informal” sector, the off-the-books bazaar of churro vendors, fruit stands and other forms of micro-commerce that rarely offers more than a subsistence living. Providing those entrepreneurs with affordable banking services and credit is viewed as a key step toward building a broader Mexican middle class.

The new measures would foster more competition in the banking sector and lift some of the tight controls placed on lending after the 1995 peso crisis, said Luis Videgaray, Mexico’s treasury secretary and one of the president’s closest advisers.

Lending as a percentage of gross domestic product is about 16 percent in Mexico, he said, while the average in Latin America is closer to 50 percent.

Mexico’s finances are on solid footing, Videgaray said, and banking services dedicated to development have become “too conservative.”

“The purpose of development banking should be to finance innovation, the creation of patents, infrastructure . . . it should be a bank that promotes equality between men and women,” he said, also highlighting plans to increase small-business lending for women in particular.

The government projects an economic expansion of 3.5 percent in 2013 and President Peña Nieto is promoting a series of economic reforms in areas such as energy and taxation, which he says will tack an extra two percentage points annually on to the country’s GDP growth in future years.

Share:

Facebook
Twitter
Pinterest
LinkedIn

Social Media

Get The Latest Updates

Subscribe To Our Weekly Newsletter

No spam, notifications only about new products, updates.