June 26, 2020
1. President Andrés Manuel López Obrador confirms meeting with Donald Trump
President Andrés Manuel López Obrador said he will travel to the United States to meet with U.S. President Donald Trump in early July, marking the beginning of the United States, Mexico, and Canada (USMCA) Treaty.
Andrés Manuel López Obrador said he would also like Canadian Prime Minister Justin Trudeau to participate in the meeting. The President of Mexico will be accompanied by the Ministry of Economy, Graciela Márquez, the Head of Office of the Presidency, Alfonso Romo and Secretary of Foreign Affairs, Marcelo Ebrard Casaubón. The possible meeting has been criticized by various experts regarding when it would take place, in the context of U.S. elections.
2. Bank of Mexico cuts interest rate for the fifth time
The Governing Board of the Bank of Mexico announced a 50 basis point cut to the Interbank Interest Rate, with this decision the interest rate moves to 5%. The decision of the bank’s board was unanimous and occurred in a context where the contraction experienced by the Mexican economy in the first quarter of the year has further deepened.
The International Monetary Fund (IMF) expects Mexico’s economy to collapse by -10.5%, while Banorte’s forecasts put the fall at -9.8% and Citibanamex a decline of -8.4%. According to the IMF, the fall in global GDP will be -4.9% by 2020.
3. Tax Administration Service Goes After Tax Fraudsters
This week the Mexican Tax Administration Service (SAT) disclosed that after the analysis of 22 million invoices, at least 43 companies were detected that simulated operations for more than MXN $93 billion (USD $4.06 billion) during FY 2017. In addition, the SAT published a list of 100 companies that allegedly use fake invoices in their operations.
Raquel Buenrostro, head of the Tax Administration Service, said legal action is already being prepared against at least 43 “billing” companies, which use false bills to justify non-existent expenses in order to evade taxes or cover up crimes. Since the end of 2019, the use of false invoices has been classified as an activity of organized crime.
4. Government and IP conflicts continue in the energy sector
The mayor of Tuxpan, Juan Antonio Aguilar Mancha, reported that Spanish utility company Iberdrola canceled the USD $1.2 billion investment it planned on making in the municipality of Veracruz, for the construction of a combined cycle power generation plant. Iberdrola’s decision was motivated by the lack of agreements with the Federal Electricity Commission, a state-owned company, to ensure the supply of natural gas to the plant.
President Andrés Manuel López Obrador stated that he received a letter from Iberdrola informing that they will continue to invest in Mexico and are in a position to reach agreements with the government; the President also reported that the investment has not been cancelled. On the other hand, the Secretary of Energy informed that the Federal Electricity Commission (CFE) will be responsible for tendering the construction of the generation plant project with the possibility of local companies participating in the project.
5. The National Electoral Institute disagrees with President López Obrador
After President Andrés Manuel López Obrador declared that he will become “guardian” of the 2021 elections, the directors of the National Electoral Institute (INE) reacted adversely to the statements.
The President of the INE, Lorenzo Córdova, recalled that there is already an “electoral guardian.” Director Ciro Murayama also asked the politicians to refrain from planning to influence elections and reiterated that the “INE is not part of the opposition, nor does it align with the government”.