Mexico's Finance Minister says he expects a fiscal reform package to be approved by the nation's Congress by the end of November, but that if it is not, the government will adjust its budget to accommodate the setback.
Speaking at a conference on Money and Markets in the Americas, Finance Minister Francisco Gil Diaz said Mexico's ability to weather the current economic downturn will depend greatly on the proposed reforms. He said he is confident that at least one part of the package sent to Congress by President Vicente Fox will be approved soon. He said he expects the Congress to approve the president's fiscal reform proposal before the end of the year and that he hopes it will be done before the end of November. If not, he says, the government will have to find other ways of saving money or aquiring more revenue.
The Mexican Finance Minister said the Fox government's policies have already led to increased revenues. He says streamlining of the tax process has resulted in 1.5 million more tax filings this year than there were last year.
The fiscal reform proposed by the Fox government would impose a 15-percent value-added tax on all goods and services. Opposition parties have opposed the inclusion of food, medicine and books under the tax proposal and negotiations are underway between representatives of President Fox's party, the National Action Party, and other parties to find a compromise.
Legislators say approval of the proposal before the end of November may be difficult, but they indicate that a compromise is possible before the end of the year. Some supporters of the reform, however, express concern that compromises may weaken the effect of the proposal.
Representatives of international lending institutions say their upbeat forecasts for Mexico are partly based on the assumption that the reforms will be approved. They say Mexico's ability to face the economic slowdown in the months ahead will be enhanced if such reforms are in place.