Economics: A curious Private Infrastructure Accord

MEXICO - Report 09 Dec 2019 by Mauricio Gonzalez and Francisco González

Leading private sector representatives committed themselves to invest roughly 43 billion dollars in 147 projects under a National Private Sector Infrastructure Investment Agreement plan the government announced on November 26. Many sources appeared to confuse it with the government’s six-year National Infrastructure Plan, an undertaking that appears to remain a work in progress a full year into this administration. Instead, it is at best an adjunct undertaking as it fails to meet the basic criteria of specifying strategic sectors, or even pretend to explain how these projects might contribute to national development.

It is unquestionably good news that the private sector continues to sustain a portfolio of infrastructure investment projects. However, the package appears to be a grab bag of projects the private sector had haltingly begun at some point or had previously considered engaging in, and it remains unclear which of them would have been implemented without this public sector involvement.

All of these uncertainties underscore AMLO’s typical improvised approach. The agreement supposedly contemplates 859 billion pesos for 147 projects, but when the official document gets around to breaking out the numbers by sectors, 13 projects and 148.54 billion pesos go missing. Inexplicably, crucial sectors such as such as health care and energy are essentially absent. Officials were noticeably reticent about revealing details regarding the listed projects.

The document affirms the government’s commitment to facilitating and accelerating projects that contribute to economic growth and national development, and to raise the amount of infrastructure investment each year to 5% of GDP, but the amount of the private sector projects that were listed would average only about 1% a year. Moreover, they could have considerably less of an effect on GDP growth than currently thought if the projects are not completed during the years planned, a real risk if the necessary guarantees are not provided.

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