Bank loans

Mexican Senate leader wants cheaper bank loans for recovery

“It is important that banks are open to provide low interest loans to people who have lost their business or those who have closed their business during the pandemic,” Monreal, 61, said on Wednesday. It will help “people who need a bank guarantee and who need fresh money to do their business in the country”.

Mexico’s recovery stalled in the second half of 2021 as President Andres Manuel Lopez Obrador’s government refused to inject major spending to keep activity afloat. The country has spent far less than its peers on fiscal stimulus to help support its economy, placing the burden of recovery on its business sector and citizens.

Mexican banking association head Daniel Becker responded to the comments, saying he supported efforts to provide more bank loans, but that a cap on interest rates would stifle competition. Monreal did not say whether its proposal would put a cap on rates.

“I think there’s historical evidence that setting rate caps doesn’t get you to the right place and doesn’t generate the incentives that people are looking for,” Becker told Bloomberg Linea. Becker said he plans to discuss the proposal with Monreal.

Bank lending in Mexico as a percentage of gross domestic product is generally among the lowest among major economies in the region, and inflation is near a 20-year high, reducing the purchasing power of Mexican families. According to data from Bloomberg, the country’s total bank performing consumer loans are still about 4% below their pre-pandemic peak.

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This is not the first time that the top senator from Morena, Mexico’s ruling party, has pushed for legislation aimed at impacting the banking system. In 2019, Lopez Obrador overturned a bill introduced by Monreal that sought to end various fees levied on consumers. A controversial effort to force the central bank to buy excess dollars held by local banks was also halted last year.

Monreal also said he expects the lower house to vote by the end of April on the government’s controversial proposal to hand over majority control of Mexico’s electricity sector to a utility. If approved, he plans to convene the senate for a special session soon after. The bill has been defeated by crucial opposition lawmakers, who want talks postponed until at least September.

“We will review it carefully once they send it to us, since we are the part of Congress responsible for reviewing it, and we will proceed with caution, listening to all voices,” he said. .

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Monreal is one of three main Morena politicians to have revealed his intention to run for president in 2024, along with Mexico City Mayor Claudia Sheinbaum and Foreign Minister Marcelo Ebrard. He appeared with 9% intention to vote among Morena supporters in an El Universal/Buendia y Marquez poll last week, behind Sheinbaum and Ebrard, who had 31% and 25% support, respectively.

During the interview, Monreal said he still plans to run as Morena’s presidential candidate. Although he is not currently considering making a bid for another party’s nomination, he has refused to completely rule out the possibility.

(Updates with Banking Association Head comment to paragraphs five and six.)