More money for more pensions. Inflation control. Closure of refineries. The promises that the candidates have made in this presidential electoral contest go directly to the heart of the greatest concerns of Mexicans. However, not all promises have landed with a viable plan to execute them.
This is a recount of some of the economic promises that the candidates have made that are unviable, misleading, or simply empty.
Pensions
Both the candidate of the opposition alliance Fuerza y Corazón por México, Xóchitl Gálvez, and the official candidate, Claudia Sheinbaum, have promised to expand the current pension program for older adults. Currently, the federal government transfers 6,000 pesos to adults over 68 years of age throughout the country, and to those over 65 years of age who live in municipalities considered indigenous peoples, every two months. This Pension for well-being has increased 25% since 2021 and constitutes one of 17 social programs that President Andrés Manuel López Obrador seeks to leave in indelible ink in the Constitution.
Sheinbaum's proposal is to expand the beneficiary base by one million starting in 2025. Specifically, the Morena candidate wants to reduce the age from 65 to 60 but only for women, to whom she would transfer half of a Well-being Pension. If the rule of a 25% annual increase were met, the pension would pay 7,500 pesos in 2025; The million women over 60 years of age would therefore receive a pension of 3,750 pesos every two months.
Gálvez's proposal is even more ambitious. The candidate proposes reducing the pension age from 65 to 60 years, for both men and women. According to calculations by the Mexican Institute for Competitiveness (IMCO), the estimated cost of this proposal would be around 189,000 million pesos if it were applied this year.
“For me, these two are the proposals that the candidates have mentioned that seem the most unviable to me due to the cost they would have for public finances,” says Diego Díaz, an analyst specialized in public finances at IMCO. “We have an accelerated aging of the population. Even if they could finance it in the first year, they have to keep in mind that the eligible population is going to grow significantly. So, in the sixth year the burden is going to be much greater. This is, perhaps, the most expensive campaign promise so far.”
Mexico's low tax collection, between 13% and 14% of the Gross Domestic Product (GDP), has become the focus of civil organizations and academics who propose an "urgent" tax reform to cover social spending and guarantee access to public services. .
Fewer tax returns
In the same sense, a proposal by the candidate of the Citizen Movement (MC) party, Jorge Álvarez Máynez, seems disconnected from the tax reality of the country. The emecista has proposed “eliminating tax barriers” to small and medium-sized companies (SMEs), responsible for 9 out of 10 jobs in the country. The idea is that the tax declaration of SMEs is not monthly, but quarterly and that the Government may take more than two months to pay their tax deductions.
This would be difficult to implement and has a very limited profit margin, says Díaz. Furthermore, it does not solve a root problem which is that smaller companies seek to stay small not only to avoid paying high taxes, but also to avoid attracting the attention of organized crime.
“Each government tries to implement a tax incorporation regime that tries to make procedures simpler for independent workers or SMEs. “I think the candidates should think about other agendas that seek to benefit this sector and one that is central is extortion,” she added. Organized crime has spread to co-opt legal companies and operate them illegally, and among its favorite targets are small businesses that pay floor fees.
Inflation
“With us there will be control of inflation,” says the website
xochitlgalvez.com
,
which breaks down the candidate's promises one by one. This is a misleading proposal by Gálvez, since Mexico has an autonomous central bank that is in charge of controlling inflation. Although federal spending, if it is very high, could have an upward impact on the cost of living, the Government does not have the power or the channels to “control” inflation.
Xóchitl Gálvez during his press conference on March 27, 2024.Daniel Augusto/Cuartoscuro
Increase in the minimum wage
Sheinbaum has proposed continuing to decree increases in the minimum wage, as the current president has done. The goal is that, in 2030, income will be enough for families to purchase 2.5 basic baskets, he said. However, this is not a promise from Morena, but a commitment that Mexico adopted before López Obrador came to power.
“The USMCA includes provisions aimed at directly improving wages,” says the information page of the United States Department of Labor in its section on the USMCA, the trade agreement renegotiated under the previous Administration. “The treaty contains novel rules of origin that require that between 40 and 45% of the content of automobiles be manufactured by workers who earn at least $16 per hour in order to receive the tariff exemption,” he details.
Closure of two refineries
Although the energy transition, from polluting fossil fuels to renewable or clean energy, is an objective that all candidates agree on, Gálvez's proposal could have a negative impact on the economy if it is done suddenly, Díaz considers. The candidate has said that she would permanently close two refineries that have become air pollutants in nearby towns, in Cadereyta, Nuevo León and in Tampico, Tamaulipas.
“It has a certain logic,” says Díaz, “since the refining business, and particularly the refineries that currently operate in Mexico, have generated multimillion-dollar losses for Pemex for at least ten years.” For every barrel that Petróleos Mexicanos (Pemex) refines, the company loses $32, according to estimates based on the company's own financial reports. Closing two refineries would mean importing more refined fuels from abroad to fill that demand.
“And what implications could that have on gasoline prices? This has always been a complicated issue, for example, with President Enrique Peña Nieto's gasoline bombing, as it generated social unrest. "It's something that should be very well defined," he points out, "okay, I'm going to close them, but how is the market going to work?" What implications will it have for consumers and for the company itself, in such a way that it does not generate greater disruption?
'natural' GDP
Álvarez Máynez likes to cite a figure estimated by the National Institute of Statistics and Geography (Inegi) that says that the total cost of environmental depletion and degradation is 1 trillion pesos, equivalent to 4.5% GDP. This is a kind of “natural” GDP that can be detonated, he assures, with an environmental policy.
The concept of “natural capital” refers to quantifying the monetary value of the biological resources that supply human beings with the goods and services they consume. This trend has reached several countries around the world and academics continue to look for ways to grow economies based on these quantifications.
But Álvarez Máynez has not yet proposed how to do it. While it may be possible for Mexico to make investments that protect natural resources without implying an economic slowdown, the candidate's ambiguous mentions still lack a roadmap to achieve this.
Jorge Álvarez Máynez, presidential candidate of the Citizen Movement Party, during a meeting with university students on March 20 in Mexico City. Press Jorge Álvarez Máynez
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