By Anthony Esposito
MEXICO CITY (Reuters) – Mexico’s President Andres Manuel Lopez Obrador said on Wednesday his government will increase the budget for social programs and critical projects by $25.6 billion in order to address the economic fallout of the coronavirus crisis.
The promised stimulus follows criticism for his reluctance to support businesses and jobs with aggressive relief measures, as the private sector and analysts warn that without government support the economy risks a painful and deep recession.
“Efficiency, honesty and austerity will allow us to increase the budget to strengthen social programs and critical projects by 622,556 million pesos ($25.6 billion)”, Lopez Obrador said at his regular morning press conference.
Lopes Obrador’s announcement comes after the central bank on Tuesday unveiled $31 billion in support for the financial system, including a $10.3 billion financing facility for banks to boost lending to individuals and small and medium size businesses. The Bank of Mexico also cut borrowing costs by 50 basis points.
The left-leaning leader repeated his vow to issue 3 million loans for small businesses in the formal and informal economy and to create 2 million jobs.
“This will make it possible to protect 70% of Mexican families, equivalent to 25 million homes, especially the poor and middle class,” Lopez Obrador said.
It was not immediately clear where the funds would be drawn from or how 2 million jobs would be created amid a steepening recession. Lopez Obrador promised not to “indebt” the country, or increase revenue through higher taxes or fuel price hikes.
Last week, he said his government will inject around $2.5 billion into the economy in May.
(Reporting by Diego Ore and Raul Cortes Fernandez; Writing by Anthony Esposito; Editing by Chizu Nomiyama)
