November 27, 2018 / 1:19 AM / a year ago

Mexico's incoming government vows to keep budget trim, seeks to calm markets

FILE PHOTO - Economist Carlos Urzua, picked for finance minister of Mexico's new president Andres Manuel Lopez Obrador, smiles during an interview with Reuters in Mexico City, Mexico July 2, 2018. REUTERS/Ginnette Riquelme

MEXICO CITY (Reuters) - Mexico’s incoming finance minister on Monday said he will push for a larger primary budget surplus next year as he sought to shore up investor confidence after the main stock index fell to its lowest level since 2014.

Ever since incoming President Andres Manuel Lopez Obrador canceled a partially built Mexico City airport on Oct. 29, the peso currency and the stock market have been under pressure, raising doubts about his stewardship of the economy.

Lopez Obrador takes office on Saturday, and Carlos Urzua, his designated finance minister, said the government aims to post a primary budget surplus of around 1 percent in 2019, up from a projected surplus of 0.7 percent for 2018.

Mexico's S&P/BVM IPC stock index .MXX hit its lowest level in 4-1/2-years on Monday while the peso MXN= slipped to its weakest level against the dollar in more than five months amid ongoing concern about the incoming government's policies.

Urzua told a news conference there was no reason for concern and that the Mexican economy was in good health, noting that markets had their “ups and downs.”

After the airport decision spooked investors, markets were roiled again by a proposal by Lopez Obrador’s leftist party, the National Regeneration Movement (MORENA), to curb bank fees.

Urzua said, however, that he was confident lawmakers and banks would be able to reach agreement on ways to lower costs for users of banking services by next year.

Urzua also said that any surplus run up by the central bank would be used to pay down debt, not fund government spending. And he reiterated there could be no question of the government using Mexico’s international reserves.

Urzua said the new government would not support a proposal by a party allied to MORENA in Congress to have private pension funds administered by the state.

Editing by Dave Graham and Leslie Adler

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