Monetary policy in Mexico remains unchanged
The expansion of Mexico's economy, inflation, and public policy were all topics that were evaluated by experts, who then offered their recommendations.
Following the health crisis, the goal of economic policy will be to produce sustainable growth with monetary and macroeconomic stability, with a discernible destination toward investment to generate revenue. However, experts concurred that the economic and financial impacts of the COVID-19 epidemic, as well as the negative feature of inflation with the slowdown of productive activity, appear to be enduring.
During the XVIII Fiscal and Financial Policy Seminar, whose theme was Monetary Stability vs. Countercyclical Policy, its coordinator, Ernesto Bravo Benitez, stated that while globalization helps to dynamize economic growth, it also tends to spread systemic or global crises, "and if we do not have the instruments well aligned and the institutional strength to face them, it affects us in a significant way."
This is the situation with inflation, which is beyond national authorities' control because it is mostly imported, and they desire to manage using monetary instruments, he noted during a seminar hosted by UNAM's Institute of Economic Research (IIEc).
We hope, he continued, that countercyclical fiscal policy and procyclical monetary policy do not wind up dominating each other, and that growth will at least compensate for the 8.2 percent dip in 2020. If growth in 2022 is under 2%, "we will not even be able to recover to the level of economic performance we had before the pandemic."
In the table Contradiction of Economic Policy Instruments, Mara Irma Manrique Campos, an IIEC researcher and also the Seminar's coordinator, stated that the recent drop in economic activity in Mexico has as an essential component of the COVID-19 pandemic, but "it is preceded by a trend of more than 30 years of mediocre growth, sacrificed in exchange for price controls."
From 2018 to 2022, economic activity eased its heightened dynamics; primary activities achieved an average weighted rise of 4.4 percent; however, this is countered by a strong reduction in secondary, by minus 1.3 percent, and tertiary, by minus 1.8 percent.
According to Manrique Campos, the monetary policy profile handles liquidity for monetary and financial operations but does not relate this interest to favor the finance of productive activity or propose anything to boost final household consumption.
The conventional direction of monetary policy to ensure the stability of monetary and financial flows is obvious; however, the prospect of providing liquidity to foster a framework of sustained economic growth escapes its administration.
Ericka Judith Arias Guzmán, a postgraduate professor at UNAM's Acatlán School of Higher Studies, stated during her participation that the Bank of Mexico pursues nominal exchange rate and price stability. "When we examine the behavior of monetary variables, we see that inflation and the exchange rate follow a similar pattern." There has been no change in monetary policy over this six-year period, which was anticipated.
Several commentators contend that we need not be concerned about the inflationary process since "the fundamental difficulty is not to grow." When there is growth, a virtuous circle is created that generates more income, according to the expert.
We have the same strategy in this government of going into debt to maintain exchange rate stability and avoid inflation. "The financial cost of debt has increased significantly, while capital expenditure has declined. Debt has been stigmatized, but if we borrow to invest, we will develop resources that will be sustainable in the short, medium, and long term "Arias Guzmán reflected.
New public administration
Constantino Pérez Morales, Francisco Isidro Aguilar, and Juan Manuel León Rivas, members of the Federation's Superior Audit Office, stated at the conference "The performance evaluation system for the improvement of public policies. The case of the evaluation of federalized spending in Mexico."
If public spending is used to enhance citizens' living conditions by addressing a problem or need, and in a situation where citizens expect more and better outcomes from governments, government programs must be results-oriented, especially when resource scarcity is extreme.
In Mexico, a new public management administration model has been introduced to optimize public resources; one of its cornerstones is monitoring and assessment.
However, they acknowledged that in some states, the results of evaluations are still not taken into account to link them with the management of transferred federal resources. "There is little progress in the implementation and follow-up of the aspects susceptible to improvement, as well as in the attention to the recommendations derived from them," they said, even though taking the results into account is an input that allows them to do so.
The academic secretary of the IIEC, José Manuel Márquez Estrada, opened the Seminar by recalling that this is the eighteenth time that the meeting is held, one of the most solid in the entity, with accumulated and cutting-edge knowledge, where current issues are addressed; this discussion is important because it shows how far policies can work or not; the analyses will help us establish better conditions for growth, he concluded.
