Mexico unveils $14 bn investment plan to boost economy

Catholic faithfull wearing face masks bring their pets to be blessed at the Church of Saint Francis of Assisi, patron saint of animals, whose feast marks World Animal Day in Zapopan, Jalisco, Mexico on October 4, 2020, amid the COVID-19 coronavirus pandemic.(ULISES RUIZ / AFP)

The initial phase of the 297-billion-peso plan will start with 39 projects in the areas of communications, energy and the environment, President Andres Manuel Lopez Obrador said.

"We're going to sign an agreement with the private sector that will also mean investment, jobs and (greater) well-being," the left-wing populist told reporters.

The plan is expected to create up to 190,000 jobs, according his government, many of them in the energy industry, a pillar of Lopez Obrador's economic strategy.

Almost a third of the investment will be used to rehabilitate facilities of debt-laden state oil giant Pemex.

Carlos Salazar, president of the country's influential Business Coordinating Council, said the plan sends a "message of unity and well-being," while urging the government to give businesses "clear and stable rules."

Lopez Obrador has faced opposition from the private sector to some of his economic policies, notably for not doing more to help companies and boost the economy in the face of the coronavirus outbreak.

The left-wing populist says his priority is helping ordinary Mexicans with social aid and loans while avoiding saddling the country with increased debt.

Experts say his strategy will help avert a fiscal crisis, but is likely to result in a less rapid rebound than if the government had spent more to boost the economy.

"Now that economies are recovering, some countries are facing serious fiscal problems. In Mexico, for better or for worse, there won't be any," Marco Oviedo, head of economic research for Latin America at Barclays, told AFP.

"The flip side is that the economic recovery in Mexico is very likely to be much slower," he added.

The International Monetary Fund said Monday that public investment should play a "central role" in the economic recovery from the coronavirus-induced downturn.

The Mexican economy, the second biggest in Latin America, suffered a record 17.3 percent contraction in the second quarter of the year from the previous quarter.

The central bank warned last month that the Mexican economy is in danger of shrinking by 12.8 percent for the whole of 2020 if the pandemic worsens.

The government imposed lockdown measures at the end of March and started gradually reopening the economy in June.

The country of 128 million people has registered around 79,000 coronavirus deaths -- one of the world's highest tolls.