Monday, January 16, 2017

President Peña Nieto: This Year will be Challenging for Mexico

Office of the Mexican Presidency

This will be a year of major challenges for Mexico; we will be prepared if we face them together: Enrique Peña Nieto

• The president gave a detailed explanation of the gas price increase.
• The gas price increase is due to external factors. The government will not receive a penny more in taxes because of this increase.
• To prevent unjustified increases in other products and services, government agencies have been instructed to maintain constant vigilance to prevent abuses.
• We will work hard to maintain and strengthen economic, cultural and family ties between Mexico and the United States, he said.
• As of the first quarter of this year, there will be a 10 per cent reduction in federal agency directors’ salaries.

President Enrique Peña Nieto delivered an address to mark the start of the year, in which he said that 2017 will be a year of major challenges for Mexico, the government and our society.  “These are challenges for which we will be prepared if we face them together”.

He mentioned the gas price increase and building a positive relationship with the new US government.

In the message, broadcast on national radio and television, the president provided a detailed explanation of the gas price increase.

He said that this adjustment, “Is not due to Energy Reform or a tax increase.” “In the past year, worldwide oil prices rose by approximately 60 per cent. This, in turn, has raised international gas prices, which directly affects Mexico; because for years, over half the fuels consumed in the country were imported.”

“In other words, the gas price increase is due to external factors. The government will not receive a penny more in taxes because of this increase,” he declared.

The president explained that attempting to maintain the artificial price of gasoline would have forced the government to reduce social programs, raise taxes or increase the country's debt, jeopardizing the stability of the entire economy.”

Maintaining artificial gas prices in 2017, at the December rate, would have involved an additional expenditure of over 200,000 million pesos.

This amount is equivalent to:

• Paralyzing all Social Security services for four months: from consultations with the GP, to surgeries, daycare centers and emergency services.
• Suspending the assistance provided by the PROSPERA program to nearly seven million families for two whole years.
• Suspending the Popular Insurance Scheme, which protects the health of over 50 million Mexicans, for three years.

President Peña Nieto said that, “In the past, other governments decided to keep the price of gasoline artificially low to avoid political costs.” They were able to do so, he said, “Because the country produced more oil, which was sold at the highest price it has ever been, and the government had surplus income.”

He said that in the past six years alone, “Nearly a billion pesos were lost in subsidizing gasoline.”

"And I say that they were lost because it was money that was literally burned by giving away gasoline, rather than investing in more productive things such as public transport systems, schools, universities and hospitals,” he added.

He noted that in the case of this administration, “The first thing we did before taking this measure was to cut government spending by nearly 190 billion pesos. To date, we have had to eliminate about 20,000 jobs, equivalent to a reduction in salaries and benefits of more than $7.7 billion pesos.

Moreover, “As of the first quarter of this year, there will be a 10 per cent reduction in federal agency directors’ salaries.”

The president said: “Despite this explanation, I know that bringing gas prices into line with international rates is a difficult change. But it is my responsibility as president to make difficult decisions in the present to avoid further damage in the future.”

He said that in order to protect the population, and to prevent the gas price hike from serving as an excuse for unjustified increases in other products and services, government agencies have been instructed to maintain constant vigilance to prevent abuses.

Regarding the challenge of building a positive relationship with the new US government, the president said that, “Mexico will be able to defend and ensure the respect and international recognition it has gained in the world.”

“We will confirm the friendship between the Mexican people and the American people, and will work hard to maintain and strengthen economic, cultural and family relations between the two countries,” he said.

To this end, he said that, “Our country has its unshakable dignity, the strength of its history, its unique culture, and today, as always, its national unity.”

“Unity is the supreme value that has allowed Mexico to preserve its independence and sovereignty, and successfully cope with the greatest challenges in our history. Together, we build national unity every day,” he said.

"I am confident that, inspired by our unity, Mexico and Mexicans are prepared to face any challenge. With that confidence, I will work to ensure that in 2017 every home and family has health, success and well-being,” he said.

The text of President Enrique Peña Nieto’s address is given below:

“Mexicans:

“It is a pleasure to greet you at the start of 2017. I hope you celebrated the Christmas and New Year holidays with your family.

“This will be a year of major challenges for Mexico, the government and our society. These are challenges for which we will be prepared if we face them together.

“The first is undoubtedly the gas price increase.

“I know this situation has caused a great deal of grief and anger. These are feelings that I understand.

“So today I want to give you a full explanation of this issue, hoping to clear up any remaining doubts.

“First of all, it is important to note that this gas price increase is not due to Energy Reform or a tax increase.

“So why did gas prices go up? In the past year, worldwide oil prices rose by approximately 60 per cent.

“This, in turn, has raised international gas prices, which directly affects us; because for years, over half the fuels consumed in the country were imported.

“In other words, the gas price increase is due to external factors. The government will not receive a penny more in taxes because of this increase.

“Attempting to maintain the artificial price of gasoline would have forced us to reduce social programs, raise taxes or increase the country's debt, jeopardizing the stability of the entire economy.

“Maintaining artificial gas prices in 2017, at the December rate, would have involved an additional expenditure of over 200 billion pesos.

“This amount is equivalent to paralyzing all Social Security services for four months, from consultation with the family doctor, to surgeries, nurseries and emergency services and suspending the support provided by the PROSPERA Program to nearly seven million families for two full years, and suspending the Popular Insurance Program, which protects the health of over 50 million Mexicans, for three years.

“At this point I would like to ask what you would have done?

“Moreover, maintaining artificial gas prices would mean taking away resources from the poorest Mexicans to give to those who have the most.

“The hard facts speak for themselves: 60 million Mexicans, those with the lowest incomes, consume only 15 percent of the gasoline, while 12 million, the 10 percent of the population with the highest income, consume 40 percent of gasoline.

“In the past, other governments decided to keep the price of gasoline artificially low to avoid political costs.

“They were able to do so because the country produced more oil, which was sold at the highest price it has ever been, and the government had surplus income.

“Thus, in the past six years alone, nearly a billion pesos were lost in subsidizing gasoline.

“And I say that they were lost because it was money that was literally burned by giving away gasoline, rather than investing in more productive things such as public transport systems, schools, universities and hospitals.

“In our case, the first thing we did before taking this measure was to cut government spending by nearly 190 billion pesos. To date, we have had to eliminate about 20,000 jobs, equivalent to a reduction in salaries and benefits of more than $7.7 billion pesos.

“Moreover, as of the first quarter of this year, there will be a 10 per cent reduction in federal agency directors’ salaries.

“Despite this explanation I know that the fact that gas prices are being brought into line with international rates is a difficult change.

“But my responsibility as president is precisely to make difficult decisions in the present to avoid further damage in the future.

“What would happen if we did not protect the stability of our economy?

“Heads of household would lose their jobs; young people who are graduating today would not find work; couples who have just bought a house would find it very difficult to pay off their mortgage; and housewives would no longer be able to afford things since all prices would go up.

“That's what happens when a country loses its economic stability: Families, especially those with lower incomes, would be severely affected. And to prevent this, the government is taking tough decisions.

“In order to protect the population and prevent the gas price hike from serving as an excuse for unjustified increases in other products and services, government agencies have been instructed to maintain constant vigilance to prevent abuses.

“The government is also engaging in discussions with the productive sectors to design a package of measures to support the family economy, encourage investment and promote employment.

“The other challenge we face in 2017 is to build a positive relationship with the new government of the United States.

“We will confirm the friendship between the Mexican people and the American people, and will work hard to maintain and strengthen economic, cultural and family relations between the two countries.

“Mexico will be able to defend and ensure the respect and international recognition it has gained in the world.

“To this end, our country has its unshakable dignity, the strength of its history, its unique culture, and today, as always, its national unity.

“Unity is the supreme value that has allowed Mexico to preserve its independence and sovereignty, and successfully cope with the greatest challenges in our history. “Together, we build national unity every day.

“Unity consists of sharing deep values, love of country and pride in being Mexican. It involves making an everyday effort to be generous to our children, our family and our country; to maintain and express the feelings of solidarity we give one another, especially at difficult times.

“I am confident that, inspired by our unity, Mexico and Mexicans are prepared to cope with any challenge.

“With that confidence, I will work to ensure that in 2017 every home and family has health, success and well-being.

“Thank you.”

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Presidency of the Republic Blog, Jan. 5, 2017, Mexico, DF; translation Presidency of the Republic