New Mexican Minister of Finance Arturo Herrera on Tuesday vowed to extend the tight fiscal grip exerted by his predecessor, moving to restore calm after the stormy departure of his former boss from the Cabinet of Mexican President Andres Manuel Lopez Obrador.
Mexico would not stray from a commitment to run a primary budget surplus of 1 percent set by former minister Carlos Urzua and would probably set a similar target for next year, Herrera said.
“The most important anchor point of fiscal policy for this year is a primary surplus of 1 percent,” he said. “It’s most likely that for next year we will have a similar number.”
Budget parameters would be presented on Sept. 8, he added.
Urzua resigned on Tuesday with a letter that shocked Mexico, as well as investors around the world.
A self-declared moderate, Urzua blamed his exit on policy “extremism,” unspecified conflicts of interest among high officials, uninformed policymaking and interference in ministry appointments.
Urzua’s commitment to fiscal discipline was seen as a bright spot in Lopez Obrador’s administration, which has rattled investor confidence with abrupt moves against business interests in major infrastructure projects.
By naming Urzua’s protege, Herrera, to the top job within an hour of the former’s resignation, Lopez Obrador stemmed a sell-off in Mexican assets that saw the peso fall as much as 2 percent and the stock market drop 1.4 percent.
Seeking to further soothe nerves, Herrera said that he did not think Mexico’s first-quarter economic contraction would herald a recession.