Challenges for President Sheinbaum in the Quest for Investments: Insights from Guillermo Ortiz
Implementing the Judicial Reform and eliminating autonomous agencies complicates the attraction of private investments that President Claudia Sheinbaum needs, amid a constrained fiscal margin, said Guillermo Ortiz, former Secretary of Finance and former Governor of the Bank of Mexico, this Friday. Ortiz mentioned that the repercussions of following the political direction of former President Andrés Manuel López Obrador are beginning to become evident, as the elements that once provided certainty and favorable regulations for investment, as well as reduced country risk, have disappeared.
He emphasized that there is a noticeable weakening of the institutional framework that places Mexico in a compromised situation, especially with Donald Trump’s arrival to the presidency of the United States and a goal to reduce the fiscal deficit by two percentage points. Currently, the fiscal deficit has reached levels not seen in over a decade, standing near 6%, which has led to cuts in public spending this year, although social spending continues to rise. "This is crucial because public finances are structurally deteriorated. Social spending accounts for over 30% of the government's total expenditure." President Sheinbaum needs greater contributions from private investment under these pressures, but at the same time, she is driving them away by implementing AMLO's reforms. "On one hand, you have strained and compromised public finances, and on the other, a significant erosion of institutional integrity," Ortiz pointed out during his remarks at the ITAM Economic Perspectives 2025 Seminar. This has led to an increase in country risk and a downgrade in the sovereign rating. Meanwhile, as the president attempts to encourage private investments in sectors like clean energy, logistics, housing, and railways, the cost of investing for companies has risen due to AMLO’s reforms.
It is evident that Mexico's financial situation faces significant challenges. The government's ability to attract private investment will be crucial not only for stabilizing public finances but also for fostering sustainable growth that benefits all Mexicans. Private investment in strategic sectors could be the key to mitigating the effects of rising social spending and a deteriorating institutional framework, thereby opening the door to more robust economic development.
