The News
Friday 14 of June 2024

Spotlight On Videgaray


Luis Videgaray,photo: SCHP/Cuartoscuro
Luis Videgaray,photo: SCHP/Cuartoscuro
Economist Luis Enrique Mercado says that the problem really is not the debt, but Videgaray's failure to increase tax revenue to meet growing government expenditures

As the nation’s Treasury Secretary, Luis Videgaray is a man acting on many fronts and tempests.

Lately he’s been not exactly in the eye of the storm but on the slashing gales surrounding the hurricane, confronting major conflicts, which may end up dumped in the garbage pail of history, or not.

Currently, Videgaray is confronting four major conflicts that will affect his future career as a potential presidential candidate for the Institutional Revolutionary Party (PRI) in 2018. For years now, Mexicans have heard his name as the president’s pick to be his successor, but in the Peña Nieto administration there are other “fighting cocks” who’d like to be picked as PRI candidates.

The four fronts are Donald Trump, the 2017 budget program to be presented Thursday in Congress, the growing public debt under the Videgaray financial administration and the broken dishes that will result from all of the above.

But at present his electoral competition is game for election year, and he must come out clean and victorious. But the tempests Videgaray is confronting are very real and may place him in a bad light in the eyes of the voters.

The noisiest problem Videgaray is currently facing is last week’s visit by Donald Trump to President Enrique Peña Nieto.

Even if it was very clear in the visit’s aftermath that it had nothing to do with the economy, Trump proved to be the most hated man in Mexico, but he was not blamed for it. He performs his act in the United States, and that’s his right, but Trump has badmouthed and offended Mexicans to the point where he needs to be told that enough is enough.

But what has this got do with Videgaray? Your question is valid.

Last Saturday, The Washington Post dropped a bomb on the Mexican political scene revealing that originally Trump’s visit was Videgaray’s brainchild. This version was also published in the Mexican press but immediately denied by Videgaray’s spokeswoman Claudia Algorín.

What is true is that Videgaray and a group of President Enrique Peña Nieto’s cabinet members had discussed the idea behind of the invitation.

The subject had been “ferociously” discussed and Foreign Relations Secretary (SRE) Claudia Ruiz Massieu was totally against it. Finally, Videgaray’s opinion prevailed and on Aug. 26, and a messenger delivered two invitations to Donald Trump and Hillary Clinton at their New York campaign headquarters.

The one fact standing out is that the letter was signed by President Peña Nieto. In fact, Monica Algorín said that from the start it was the president’s idea and that Videgaray and Ruiz Massieu were invited for an opinion.

Nevertheless in a large portion of the Mexican media, Videgaray was blamed for the invitation and people say that the president’s broken dishes after the Trump meeting are all Videgaray’s.

Another version is that Videgaray is extremely worried about his image and popularity particularly after Moody’s and Standard and Poor had lower the gross domestic product economic growth forecasts to less than two percent (1.7 percent for 2016). With a sensational happening, Videgaray hoped to calm down anxiety in the local financial markets.

Adding insult to injury, last Friday, Mexico’s Central Bank (Banxico) president Agustín Carstens announced that indeed the increasing debt was the worst concern the Mexican economy has to confront nowadays and the problem with it was not that it was growing dangerously, but the speed at which it was increasing.

Videgaray is responsible for the public debt and is said to have taken Carstens’ wallop as friendly fire.

Reality has it that the Mexican economy nowadays is shielded by the international reserves and if the administration does not spend them — or worse, steal them as has happened in the past — Peña Nieto will be able to deliver perhaps not a thriving economy, but a stable one when he leaves office on Nov. 30, 2018.

But there are differences of opinion among economists. Economist Luis Enrique Mercado says that the problem really is not the debt, but Videgaray’s failure to increase tax revenue to meet growing government expenditures.

At this point, no matter how much the president and his cabinet defend Trump’s visit, it was clear that it was immensely damaging to the president’s reputation, and perhaps Treasurer Luis Videgaray is collateral damage.

The Trump visit and the public debt are part of the broken dishes. Now Mexicans are gearing up for what’s important for 2017, and that’s the year’s budget.

How will senators and deputies receive the president’s budget proposal drafted by Luis Videgaray Thursday? That is the question.