Mexico financial sector reform proposals 2013
By Adina Moloman
Sources: Notimex, Reuters
The Mexican Secretary of the Treasury and Public Credit, Videgaray’s notice of the executive branch making public its proposal to amend the Mexico’s financial system.
Proposed are series of actions to increase bank lending to priority areas and projects such as to small and medium size enterprises, infrastructure projects, technology innovation and patent development for those Manufacturing in Mexico.
It is widely known that in Mexico there is a strong private banking system with less favorable conditions in terms of interest rates, duration and amounts of loans especially those destined to small and medium enterprises. The proposals regarding the financial system will facilitate that commercial banks make more and lower interest loans, thus giving a more active role to the Mexico development bank.
According to the proposal for financial reform the commercial Banks would be subject to periodic lending reviews and the banking regulator would have the powers to punish those lenders that offers credits below the required levels. A secondary goal of this reform goal is to create a stable tax policy.
By having less access to credit, the small and medium firms are having a diminished potential to grow and innovate.
In Mexico the SME’s are is pursuing great efforts to encourage the Maquiladora Sector as local suppliers of multinational companies doing Mexico manufacturing.
Many of these SME’s have learned and adopted from multinationals the corporate culture, managerial know-how and best practices, transfer technology and innovation and getting access to international markets. This is becoming a dynamic segment that can drive economic growth, create jobs and foster competition, innovation and productivity.
As Videgaray says: if Mexico implements the financial reform along with other structural reforms, economic growth could rise to over 5 percent yearly in a sustained basis.
