April 17, 2020
1. SARS-CoV-2 quarantine in Mexico extended through May 31
Undersecretary for Health Prevention and Promotion, Hugo López Gatell, announced that the “National Program of Healthy Distance,” which includes social isolation and a pause on non-essential economic activities, will run until May 31st in various areas of the country. Previously, April 30th was set as a date for a return to day-to-day economic activity.
Hugo López-Gatell added that in municipalities with zero or few cases of Covid-19 will be able to resume economic activities beginning May 17th. The President of Mexico called on all sectors to respect social isolation measures in addition to the announcement of credits for micro-enterprises. There are currently 6,297 cases of confirmed patients of Covid-19, 12,340 suspect cases and 486 deaths in Mexico.
2. Fitch degrades Mexico’s sovereign rating
Taking into account the stop to non-essential economic activities in Mexico and the global economic recession, qualifier Fitch Ratings decided to lower Mexico’s sovereign grade from BBB to BBB-, which represents the second drop for the agency’s sovereign rating in less than a year.
Fitch Ratings considered degrading Mexico’s sovereign note: deteriorating business climate in the country, an erosion in institutional strength, an absence of fiscal response from the Covid-19 crisis and a possible 6% debt increase coupled with its projection of a GDP drop of at least 4% by 2020.
3. Formal employment trends downwards due to Covid-19
According to figures from the Mexican Social Security Institute (IMSS) during the month of March the number of workers affiliated to this institute grew by only 0.7% representing the lowest figure since January 2010.
Similarly, the IMSS figures showed that in a concurrent manner with the beginning of measures to contain the spread of Covid-19 in Mexico, 130,593 formal jobs were lost, similar to that recorded in this area in March 1995, when 193,301 job losses were recorded. In addition, the Ministry of Labor and Social Welfare reported that a total of 346,878 jobs had been lost since the first phase of the emergency declaration by Covid-19 was implemented, from March 13 to April 8th.
El Economista: Nuevo empleo formal tiene su peor marzo desde 1995
4. OPEC negotiations will not damage Mexico
Mexican President Andrés Manuel López Obrador reported that the agreement to reduce global oil production by 9.7 million barrels per day, reached by the Organization of Petroleum Exporting Countries (OPEC) and in which Energy Secretary Rocío Nahle participated, will not affect Mexico.
Rocío Nahle explained that Mexico committed to reduce its production by 6% which translates to 100,000 barrels of oil per day. President Andrés Manuel López Obrador thanked the United States, because in order to reach the agreement, the country will help Mexico reduce production by an additional 250,000 barrels.
5. Northeast governors demand amendment to fiscal pact
In the midst of the emergency situation created by Covid-19 various governors have demanded a review of the Federation Tax Pact, which currently implies that the federal tax budget, ISR and VAT collected are distributed among the states according to their needs and not according to their level of contribution.
For the Governors of Nuevo León, Jaime Rodríguez; Tamaulipas, Francisco Cabeza de Vaca; and Coahuila, Miguel Ángel Riquelme, this tax scheme is unfair since these three states contribute 14% of GDP and do not receive a proportional amount to what they produce. On the other hand, Enrique Alfaro, Governor of Jalisco claimed to be “tired” of the federation’s abuses and said he had a tax and legal route to abandon the pact. Other actors who demanded the revision of the pact were Nuevo León Senator Samuel García and the President of The Patronal Confederation of Mexico (Coparmex), Gustavo de Hoyos.
El Universal: Ven catastrófico que estados salgan del pacto fiscal