Introduction to Claudia Sheinbaum and Her Relevance
Claudia Sheinbaum, the President of Mexico, has initiated a new chapter in her relationship with bankers through the recent Banking Convention. This event marked a shift from potential confrontation to collaboration, focusing on expanding credit access for the Mexican population.
Sheinbaum’s Pragmatic Vision
Sheinbaum’s approach is pragmatic, aiming to work alongside the banking sector to increase credit availability for Mexican citizens, particularly micro, small, and medium-sized enterprises (MiPymes).
Current Credit Landscape in Mexico
According to official data, only 4.4% of Mexican businesses have access to bank financing, despite MiPymes accounting for 99.8% of the country’s establishments (5.4 million units). This highlights the pressing need for improved credit access.
Bankers’ Response and Collaborative Efforts
In response to Sheinbaum’s initial request to lower interest rates for MiPymes, bankers and Hacienda Secretary Édgar Amador collaborated to present a general agreement during the Banking Convention. Their objective was to reduce interest rates for MiPymes, which currently face limited bank financing options.
Bankers’ Focus on Interest Rate Reduction
During the event, bankers emphasized their commitment to reducing interest rates for MiPymes, which represent over 90% of Mexico’s productive units. Sheinbaum highlighted that only 33% of Mexico’s GDP is allocated to private sector credit, compared to 72% in Brazil.
Key Agreement Points
- Annual Increase in Credited Enterprises: The agreement aims to increase the number of businesses with bank credit by 3.5% annually.
- Financing Coverage Target: The goal is to achieve at least 30% financing coverage for the targeted enterprises by the end of the six-year term.
- Government Support: The government, through development banks, will provide up to 70% guarantees (and potentially more) to support bank loans.
- Seven Working Groups: These groups will address seven main themes: financial education, digitalization and formalization, supply chains, regulatory simplification, specialized commercial courts, public guarantees, and access to financial information.
- Priorities: Both parties prioritize tackling informality and reducing cash usage, with Emilio Romano Mussali (new ABM president) advocating for limiting high-denomination banknote emission and promoting digital transactions.
New Era of Collaboration
With Emilio Romano Mussali, a seasoned public sector professional, now leading the Association of Banks (ABM), there seems to be a promising new relationship between the government and bankers. The recent Banking Convention signifies a step towards understanding and cooperation, paving the way for potential growth in Mexico’s financial sector.
