Departamento de Estado 10, elecciones presidenciales México 2006

8/8/2019 Departamento de Estado 10, elecciones presidenciales Mxico 2006

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IIP-00 DSCC-00 PRM-00 DRL-00 G-00FAT-00 SAS-00SWCI-00002W0Z JUN 06MEMBASSY MEXICOSTATE WASHDC 1660ALL US CONSULATES IN MEXICO COLLECTIVEOMMERCE WASHDCENERGY WASHINGTON DCAS MEXICO 003302

TE FOR WHA/MEX, WHA/EPSCOR LAC:MARK CARRATO

MMERCE FOR ITA/MAC/NAFTA: ANDREW RUDMANFOR INTERNATIONAL AFFAIRS KHARBERT AND KDEUTSCH

. 12958: N/AS: ECON, EFIN, EINV, PGOV, PINR, MXECT: AMLO ANNOUNCES A SUBSIDIES PROGRAM

Sensitive but unclassified, entire text

BU) On May 30, Democratic Revolutionary Party (PRD)date Andres Manuel Lopez Obrador (AMLO) announced on

some details of a comprehensive subsidiesurchasing power by up to 20%. AMLO expects the plan

tion through a set of economic.

cal analysts note that without fiscal reform, AMLO's

U N I T E D S T A T E S D E P A R T M E N T O F S T A T ER E V I E W A U T H O R I T Y : O S C A R J O L S O NDA TE/CA SE ID: 17 FEB 2009 200704261NCLASSIFIEDE2F1C8 151705Z /38


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UNCLASSIFIEDproposal is not feasible. End summary.AMLO ANNOUNCES A "NEW" ECONOMIC/SOCIAL PROGRAM

2. (SBU) On May 30, six days before the last debate, ANLOannounced an economic-social program aimed at increasingMexican families' income and their purchasing power. In atwo-minute message on national television networks, the PRDcandidate promised to increase income and purchasing power byan average of 20% for all Mexicans earning less than MP 9,000(USD 790) per month. AMLO's plan, which he proposesimplementing immediately upon taking office, includes lowerenergy rates and other economic supports. A day after itsannouncement, AMLO's economic advisor Rogelio Ramirez de la 0held a press conference to explain the proposal in moredetail. The announcement also provided some new, albeitlimited, specificity to a proposal that has been afundamental piece of his campaign - a promise to cut

nt expenditures by 1% of GDP in order to increase

MILY INCOME

U) Ramirez de la 0 explained that AMLO's plan to reduceve impact on the income of 18

families. AMLO's economic team calculated the impact'

For families with a MP 2,500 (USD 219) monthly income, the238For families with a MP 5,000 (USD 438) monthly income, theup to 17%For families with a MP 9,000 (USD 790) monthly income, theup to 14%amirez de la 0 calculates that the average impact of AMLO's

would be a 20% increase in income. He added

ECTED COST OF THE SOCIAL PROGRAM

U) This comprehensive subsidy program would represent

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i nnLASP 100 billion (USD 8.7 billion) more in higher income forfamilies. The total fiscal cost would be MP 80 billion (USD7 billion) distributed as follows: MP 10 billion for thereduction of electricity fees, both for individuals andbusinesses; MP 15 billion for the reduction of gasolineprices; MP 35 billion for the economic support program forelderly; and MP 20 billion for free school materials. Theother MP 20 billion (USD 1.7 billion) would be obtainedthrough the reduction of other prices as a result of thelower energy rates. According to Ramirez's projections, theAMLO administration would obtain the needed resources throughrigorous budget management and a change in the government'sspending culture.

INFEASIBLE PROPOSAL WITHOUT FISCAL REFORM

. (SBU) Many local analysts agree that AMLO's proposal tothe

RD candidate represents 1% of GDP, which in addition to thetax evasion rate of 1.3% of GDP, would increase thecit and public debt Ramirez de la 0 explainedwould not be the case because the AMLOtration would cut some budget items. However, AMLO's

andcosts to offset the cost of thedifficult in practice. Moreover, aons to real costs. According to Ramirez de la 0, the

RD's subsidies program would translate into higher income,that

create inflationary pressures. The

cted. However, on several occasions AMLO has said thatank of Mexico's main objective should not only be

U) Throughout the campaign, critics have charged thatLO disregards economic fundamentals. Ramirez de la 0

that AMLO's government would spend MP 35 billion ine economic support program for the elderly. Currently,5.15 million citizens over 65old. In order to give the elderly a monthly allowance650, AMLO would have to budget MP 40 billion in

estimate for the first year to MP 60 billion.

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N CLASSIFiven that Mexico's population overU65 years i IEDs growing at anannual rate of 4%, revenues would have to grow very quicklyto sustain the program.COMMENT

7. (SBU) AMIO's announcement of his subsidies program at theend of May could be his last official economic proposalbefore the elections. In advance of the June 6 debate, i twas an effective publicity strategy and may have regainedsupport he lost after publicly calling President Fox a"pelele," or weakling . Most polls place AMLO at least 2points ahead of Felipe Calderon from the National ActionParty (PAN). Only two weeks before July 2, both front-runnercandidates are more likely to focus more on accusations andattempts to discredit their opponent, than proposing any morenew proposals.. (SBU) Ramirez de la 0 acknowledged that similar social

have existed for years. Former PRI president Carlosalinas de Gortari called his program "Solidaridad", theparty PAN re-named it "Oportunidades", and all have

during the campaign.onetheless, AMLO's failure to provide more details on howtions of a MP 100 billion budget savings have raised

isit Mexico City's Classified Web Site atp : //www.state.sgov.gov/p/wha/mexicoc i ty

UNCLASSIFIED

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Departamento de Estado 10, elecciones presidenciales México 2006