The price of oil will keep dropping and it wouldn't be surprising if it reached levels like those of the 80s. Let's imagine what it means that the price of the Mexican mix of oil was exported at 133 dollars per barrel in July and halfway through December reached 33 dollars, when petroleum contributes 44 percent of the budget.It is generally considered a good (and also progressive) idea to crank up the public spending, even if that creates more debt in the short term, but De La O worries that the combination of spending increases and drastic drops in revenue will lead to greater debt, and could continue to wipe out the foreign reserves of the Banco de Mexico, which will make it harder for the peso to avoid slipping against the dollar. De La O closes with a plea for plans that are "pragmatic and not ideological." I hope he follows up on that comment in subsequent columns, because Calderón's spending plan has been pretty well accepted on the left and the right.
In these conditions the government has put forward an irresponsible budget for 2009 with a significant increase, to arrive at a total of [about] 250 billion dollars. It hasn't listened to all the warnings that have been offered about cutting down on the bureaucratic structure and utilizing its resources well.
Saturday, December 27, 2008
I wrote last week that Alfredo Thorne is pleased with Calderón's performance, but I should also mention that others are not. Here's Rogelio Ramírez De La O: