Politics: The government’s skewed budget priorities

MEXICO - Report 30 Nov 2020 by Guillermo Valdes and Francisco González

Following the adage that one discerns a government’s priorities not from its speeches but from its budgets, the first conclusion we can draw from the 2021 spending budget is that the health, economic and security crises plaguing the country have failed to move President López Obrador enough to make the slightest change to his policy priorities. Operating for a third year with a strictly inertial budget, government planning has not contemplated any additional monies for dealing with these historical adversities next year.

It did shift five percentage points of funding for areas included in the social development classification but largely at the expense of any undertakings nominally regarded as promoting economic development. Flipping such budget priorities is counterproductive from a developmental perspective, and the government’s single-minded focus on distributing cash directly is hardly an effective formula for lowering poverty, especially when less attention is paid to promoting economic and employment growth. Worse still, just when an aggressive counter-cyclical economic policy is required now that the country is experiencing its most dramatic GDP plunge in nine decades, the government has failed to produce so much as a single program or allocate any resource to that end. And even as labor poverty has risen in 28 out of 32 states, and roughly 45% of those working are not making enough to afford the basic food basket, the government is not anticipating the need to expand cash transfer programs to include anyone not enrolled before the pandemic.

One major exception to the budget’s inertial aspect is the almost 100% increase in funding for the administration’s emblematic investment projects and their highly dubious profitability, projects that absorb a considerable portion of the government’s economic development budget.

A strictly austere tack is also apparent throughout the social budget. For example, despite having eliminated the special fund for catastrophic health expenses ostensibly to acquire vaccines, the government failed to assign those monies to the health sector budget, which remains at pre-pandemic levels, with all the sacrifices to care that entails.

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