The International Monetary Fund warned Thursday that uncertainty associated with the policies of the incoming administration of Mexican President-elect Andres Manuel Lopez Obrador persists and poses a significant challenge for the country’s economy.
The IMF issued the warning in a report after a team visited Mexico last month to conduct an annual economic review. Its concern comes a week after Fitch Ratings changed its outlook on Mexico’s long-term foreign currency debt from “stable” to “negative,” citing the potential policies of Lopez Obrador.
The IMF report said Mexico’s main domestic risks “pertain to uncertainty” about the priorities of the administration, the continued existence of energy and other reforms, and questions over whether oil production would decline further. It also mentioned a deterioration of the rule of law.
The future hinges on the “steadfast implementation of structural reforms while ensuring continued macroeconomic stability,” the report said.
The leftist Lopez Obrador has tried to smooth anxieties in the business community, but he upset many last month by cancelling a partly built, $13 billion airport on the outskirts of Mexico City.
Lopez Obrador has also said he will review private concessionary oil exploration contracts granted under current President Enrique Pena Nieto’s energy reform. He said he won’t cancel them if they were fairly granted, but some fear future contracts may be delayed or cancelled.
The multilateral body said Lopez Obrador’s administration will inherit an economy with “very strong fundamentals.”
The fund expects growth of 2.1 percent in 2018 and 2.3 percent in 2019 and a decline of public debt to around 53 percent of GDP from 54.3 percent in 2017.
Lopez Obrador will take office on Dec. 1.
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