The News
Wednesday 28 of February 2024

2017 Budget Cuts

The dollar was sold at 18.60 Friday,photo: CAPITAL MEDIA
The dollar was sold at 18.60 Friday,photo: CAPITAL MEDIA
It just happens to be true that all the happiness experienced during a drinking bash is ruined by the next day hangover

Oh, oh, we told them so!

Back at the beginning of 2013, then new President Enrique Peña Nieto kept on talking as if he was still in an electioneering campaign, making promises he then thought he could keep.

To boot, he was then backed by a newly elected Congress — both the Chamber of Deputies and the Senate — ready to live high on the hog given the fairly decent national financial status left behind by former President Felipe Calderón, no matter how much maligned he was at the time.

But it was still during Calderón’s tenure in October 2012 that the 2013 budget was lined up. Those were the days of milk and honey, not to mention wine and roses, in which a barrel of oil was budgeted at over 100 smackers and Congress budgeted at an average $85 per barrel to be reaped by the government.

The other average $15 were for Pemex to “invest” on operations and infrastructure.

At the time many of us in the ever ignored newspaper columns cried wolf as many of us saw that this type of ripping-off Pemex spelled disaster for the company. But did the deputies and senators pay heed? Of course not.

Then came the time to do the 2014 budget and in their money drunken binge the deputies approved a budget in which the price of oil was forecast at $79 per barrel and luckily, secured through insurance for the year.

Well, the absolute lack of vision of Congress as to the shape of things to come is now a reality and a sore in the soundness of the Mexican economy. It just happens to be true that all the happiness experienced during a drinking bash is ruined by the next day hangover.

The price of oil began on a downward collapse since June 2014 and the rest is history. The $79 per barrel pipe dream fizzled and suddenly those of us “idiots” warning Congress to budget at below $50 were suddenly right.

But that was two years ago and the time to pay for the humongous budgeting blunders of yesteryear are here today.

Earlier this year the Peña Nieto administration was forced to pay for the broken dishes announcing a reduction on budget expenses for 2016 of 132.3 billion pesos or $7.6 billion. Of that money, $100 billion were reduced from the Pemex budget, sending the company reeling into bankruptcy and forfeiting payment to suppliers, who still don’t see their money coming.

But that’s history and all in the past.

Last Friday the Finance Secretariat (Hacienda) sent Congress a budget proposal called “Criteria Previous to an Economic Policy” for 2017 and let there be absolutely no doubt that Hacienda secretary Luis Videgaray is forecasting more cuts for next year.

In fact, the proposed reduction in the document is for 175,100 billion pesos or approximately $10.1 billion to have “a realistic and responsible budget.”

The proposal does not stipulate where the budget cuts will be but surely — it will not come as a surprise when Mexicans find out — that they will finish dismantling the Pemex infrastructure.

Once again the “think positive when in crisis” attitude the administration is taking is that these cuts aim at not hurting the overall shape of the national economy and keep growth at the average two percent it has been at for the past 40 years.

To finish my Monday morning quarterbacking sermon, let me just tell you that those of us who lived through the 1980s crisis — with up to a 159 percent inflation and a 3,500 percent devaluation — knew the error of budgeting oil at a high price.

This administration broke the dishes, and now it has to pay for them.

And don’t say we criticize out of the blue because this is one case in which, oh, oh, we told them so.