Author: Antonio Guerrero


Filipe Calderón

When Mexico’s Electoral Tribunal in September declared Felipe Calderón the official winner of the nation’s hotly contested presidential election, it appeared that it would be smooth sailing until his December 1 inauguration. Instead, it seems Calderón’s headaches are only just beginning.

Calderón, a centrist from the ruling PAN party, won the July election with a meager 0.5% margin over former Mexico City mayor Andrés Manuel López Obrador, a member of the left-wing PRD. Despite the tribunal’s ruling, López called for civil disobedience and contested the outcome, vowing to establish a “parallel” regime.

A former energy minister, the president-elect has adopted some of his opponent’s rhetoric regarding poverty alleviation and social justice in a move to win over López supporters while reportedly starting talks with opposition leaders to swap cabinet posts for congressional support. At stake are reforms the new administration must push through congress to boost Mexico’s competitiveness amid mounting competition from Asia.

“The narrow margin of Calderón’s victory could make it difficult for the new administration to implement its policy agenda,” says Standard & Poor’s credit analyst Joydeep Mukherji. “However, the uncertainty on the political front is balanced by Mexico’s good economic performance in 2006 and its track record of macroeconomic stability.”

S&P;, which affirmed Mexico’s BBB sovereign rating after Calderón was declared the winner, predicts 2006 GDP growth of 4%, with high oil revenues helping the government meet its fiscal targets. The central bank expects GDP to grow by 4.5% this year, up from 2005’s 3% and the strongest growth rate since 2000’s 6.6%.

Mukherji warns that while Calderón’s ability to gain support for his reform agenda could further strengthen Mexico’s rating, his inability to reduce the current level of political polarization could add medium-term fiscal pressures. Fortunately for Calderón, the prefunding of external debt falling due in 2006 and 2007 will provide some breathing room.

Antonio Guerrero