ACAPULCO, Mexico, March 21 (Reuters) - For two years, financiers at Mexico’s biggest annual banking bash issued veiled warnings about the risk of veteran leftist Andres Manuel Lopez Obrador taking power.
Now he is president, they and industry bosses have changed tack, pledging support for the popular new leader and his plans to revive the economy from the bottom up.
Bank bosses have used the run-up to the banking convention in Acapulco beginning on Thursday to signal approval for Lopez Obrador’s plans to tackle chronic inequality via welfare handouts, ramp up financial inclusion and lift economic growth.
“The financial sector has been and will continue to be committed to Mexico’s development, which is why he celebrate and go along with the measures ... announced by the Mexican government,” Marcos Martinez, head of the Mexican banking association (ABM), said at a recent event with Lopez Obrador.
Martinez and other bankers hope the president will meet pledges to tackle corruption and gang violence in Latin America’s No. 2 economy, buttressing growth with the rule of law.
Still, skepticism about his economic credentials is widespread in business circles. So far executives have reasoned they have more to gain by working with him than picking a fight with a president whose approval ratings run close to 80 percent.
Lopez Obrador, who took office in December, wiped billions of the value of Mexican financial assets when he canceled a new Mexico City airport on Oct. 29. Proposals floated by his MORENA party in Congress to curb bank fees also spooked markets.
Yet even as he rolls out welfare schemes across Mexico, he has promised to run a tight budget to protect the country’s investment-grade credit rating and says he can achieve average annual growth of 4 percent during his six-year term.
At this week’s conference in Acapulco, Mexico’s banks would likely deliver a clear message to the president that they will work with him to achieve his goals, said a senior financial industry source, speaking on condition of anonymity.
That could unlock funds for Lopez Obrador’s plan to create jobs via infrastructure spending, and complement the goal of employers’ federation COPARMEX to lift the spending power of the lowest paid by tripling the minimum wage by 2024.
Cooperating with Lopez Obrador to encourage an expansion of the Mexican middle class could become a major driver of growth, and help curb the president’s worst instincts, a senior industrialist said, speaking on condition of anonymity.
Stating Mexico had “more financial resources than there are projects”, the new head of Mexico’s powerful CCE business lobby, Carlos Salazar, said last month it would work to end extreme poverty by the end of Lopez Obrador’s term.
By then, the ABM aims to get 30 million more people to use banking services - nearly three-quarters of those estimated to be without an account - and to support domestic demand by boosting lending to small businesses, homebuyers and families.
Deputy finance minister Arturo Herrera told Reuters the government would push hard on financial inclusion at the banking convention, where Lopez Obrador is due to speak on Friday.
However, for the president to make the most of the goodwill in boardrooms, he must work harder to undo the damage caused by poor decisions such as the scrapping of the airport, said Gustavo de Hoyos, head of employers’ lobby COPARMEX.
Business wanted to invest, but right now, the government scored only about “50 percent” on investor confidence, he added.
“If the president and his team can take advantage of these strengths,” de Hoyos told Reuters, “I think we could see really big progress in the course of this administration.” (Reporting by Dave Graham and Stefanie Eschenbacher; Editing by Lisa Shumaker)