Mexican President Vicente Fox says his country is not in danger of following Argentina into economic turmoil in spite of the Mexican Congress' failure to pass the fiscal reform package he proposed.
The economic crisis in Argentina has shaken all of Latin America, but Mexico remains on firm ground, according to President Fox. Mr. Fox says nothing similar to the Argentine crisis will happen in Mexico, because he says the circumstances are completely different.
Many Mexicans remember well the 1994-95 currency devaluation that derailed the economy and resulted in a loss of jobs and revenue. The crisis in Argentina has awakened fears that Mexico could suffer again. But economic analysts note that Mexico is in an advantageous position because of its closeness to the United States in terms of both geography and trade agreements. Mexico's peso currency remains strong and foreign investment funds that have fled Argentina and some other regional nations have, in some cases, been diverted to Mexico.
Still, the Congressional rejection of the Fox reform package could have a negative impact on the otherwise solid Mexican image. President Fox says the Congress failed to provide enough, but that his government will do all it can to keep the economy going strong. He says the budget passed by the Congress for this year is insufficient, but that, in spite of this, he remains committed to protecting Mexican jobs, the buying power of Mexican citizens and benefits for the poor.
The Mexican Congress passed a number of new taxes during the last minutes of 2001 and the first hours of the new year. There are new taxes on telephone communications, soft drinks, cosmetics, cigarettes and liquor, but the package provides only half of what the Fox government requested. The Congress also set aside a comprehensive fiscal reform proposal that both Mr. Fox and foreign investors had wanted to see enacted.
In New York, the Standard and Poor's financial institution announced that it will take a closer look at the Mexican budget situation over the next two weeks. A spokesman for the company, however, said there was no initial disappointment in what the Mexican Congress had done since analysts following the situation were expecting a watered-down version of what President Fox had proposed.