Record-Breaking Cash Dollar Transactions in Mexico's Financial Institutions

In a surprising turn of events, Mexico has witnessed a significant increase in forced labor cases, highlighting the country's deep-rooted issues of inequality and discrimination. According to the Global Slavery Index developed by Walk Free, an organization at the forefront of combating modern slavery, the number of individuals trapped in forced labor situations has doubled between 2018 and 2022. What was once estimated to be around 341,000 people in "modern slavery" has alarmingly surged to a staggering 850,000 individuals. Moreover, this distressing reality intersects with forced marriages, further perpetuating the cycle of exploitation and abuse.

Katherine Bryant, the head of Policy and Programs at Walk Free, shed light on a specific case in Guerrero, where young girls are being sold as brides for prices ranging from $2,000 to $18,000. Shockingly, this not only involves forced labor but also entails sexual abuse and domestic slavery. Such deplorable circumstances emphasize the urgent need for the Mexican government and society as a whole to address these deep-rooted issues, ensuring the protection and well-being of vulnerable individuals.

While Mexico grapples with these distressing challenges, it has simultaneously become a beacon of hope for the United States automotive sector through the phenomenon of nearshoring. Recent developments indicate that relocating production chains to Mexico has resulted in a 35 percent reduction in auto parts costs for American buyers compared to importing from China. This favorable situation is predicted to become even more pronounced by 2030, with a projected 44 percent cost advantage for purchasing parts from Mexico over China. Experts suggest that China's tariffs on exports to the United States and the simmering trade tensions between the two countries contribute significantly to this disparity.

Amidst the economic fluctuations, the appreciation of the peso and lower costs in dollars have prompted an increase in purchases of basic grains and meat by importers in Mexico. This trend, observed during the first four months of the year, indicates a surge in imports of essential commodities. However, it's important to note that the benefits of these increased purchases and cost savings have yet to reach the end consumer.

Grupo REFORMA's analysis, utilizing data from Inegi and the Grupo Consultor de Mercados Agrícolas (GCMA), reveals that a record-breaking 13.7 million tons of basic grains were imported from January to April, representing a 10.5 percent year-on-year increase. Although the value in dollars rose by 14.3 percent, traders paid 3.2 percent less in real terms in pesos compared to the same period in 2022, resulting in a 12.4 percent decrease in the price per ton. Notably, corn imports witnessed a 19 percent increase in tons, accompanied by a 12.7 percent surge in average prices in dollars. However, when considering the price per ton in pesos, it decreased by 4.6 percent, with the total bill experiencing a 34 percent rise but the total value only increased by 14 percent.

In a digital age fraught with cyber threats, Mexican agencies are not immune to the prying eyes of hackers. SILIKN, a prominent cybersecurity company, has detected spying updates in Microsoft software, and shockingly, it has been found that 22 Mexican government agencies utilize this compromised software. The implications of such vulnerabilities raise concerns regarding the safeguarding of sensitive information and the need for robust cybersecurity measures to counteract these intrusions effectively.

Switching gears, let's delve into the financial realm, where cash-dollar transactions in Mexican financial entities have reached record levels. The year 2022 witnessed a notable surge, with 5.7 million transactions involving cash dollars, marking the highest number recorded in the past decade. This represents a 5.5 percent increase compared to the previous year. The trend has continued into the current year, with 2,525,256 reports of cash dollar operations registered from January to April, according to data from the Financial Intelligence Unit (FIU). These operations encompass a range of financial activities, including the purchase, deposit receipt, credit or service payment, transfers, and cash fund management, in line with the Ministry of Finance and Public Credit's regulations.

Interestingly, this surge in cash dollar transactions can be attributed to the appreciation of the peso and the resulting lower costs in dollars. Importers of basic grains and meat have capitalized on these favorable conditions, increasing their purchases. However, it's important to note that the benefits of these increased imports and cost savings have not yet trickled down to the end consumer.

In the realm of tax collection, the Tax Administration Service (SAT) has been successful in collecting outstanding debts from large corporations. Under the leadership of Secretary of Economy Raquel Buenrostro, the SAT managed to collect more than 35 billion pesos in 2020 alone. These debts had been pending payment due to disputes and controversies dating back to previous administrations. While several companies, including Grupo Salinas, Interjet, Alsea, and Vitro, have made strides in settling their tax obligations, some are still locked in battles with the tax authorities. These ongoing disputes highlight the complexities of tax compliance for large corporations and the SAT's commitment to ensuring that all taxes owed are settled.

As Mexico grapples with the challenges of forced labor, cyber threats, economic fluctuations, and tax collection, balancing the need for social justice, economic growth, cybersecurity, and financial stability poses continued efforts, proactive measures, and collaborative solutions.