MEXICO CITY: President Claudia Sheinbaum’s allies in congress are in a hurry to lure more private investment by speeding up project approvals, clear-eyed that public spending alone isn’t sufficient to boost lacklustre growth in Latin America’s second-biggest economy.
The sense of urgency matches Sheinbaum’s rush for new streams of private sector money, especially for needed infrastructure that can generate more jobs and promote well-being ahead of next year’s midterm election.
But questions remain over whether the latest proposal from her ruling Morena party will be enough to jumpstart investment during her presidency.
“We need to speed up this plan,” said Alfonso Ramírez Cuéllar, an influential lawmaker who’s close to Sheinbaum and part of the Morena leadership team in the lower house.
“Our main concern is the lack of sustained economic growth,” he said, in an unusually blunt assessment of the state of the economy.
Mexico’s gross domestic product is forecast to expand 1.4% this year, inching up from just 0.5% in 2025.
Since Sheinbaum took office in late 2024, aggregate investment growth has slid from about 2% year-on-year to minus 6% at the end of last year.
The leftist leader needs the economy to perform much better to sustain the generous social spending she favours.
Speaking on the sidelines of a banking convention that gathers top executives across financial services, Ramírez Cuéllar pointed to highways, water infrastructure, ports, airports and rail projects as prime targets of the legislation.
“Something we really need to do is speed up authorisations,” said the lawmaker, who also sits on the lower house’s powerful finance committee.
He singled out the need to strengthen the framework for the so-called “mixed projects” that aim to boost private investment in strategic projects, something Sheinbaum has also promoted, including in the politically sensitive energy sector.
Sheinbaum’s Morena party has long favoured state-centric energy projects, suspicious of profit-maximising firms exercising too much control.
In the past, the party’s leaders have gone so far as to insist that would-be private partners to the country’s state-owned oil and power companies defer most operational decisions to them or only take minority stakes.
Under the infrastructure investment legislation, Sheinbaum would lead a new investment council designed to speed up decision-making, bring in more private capital and avoid duplicate efforts from the various involved groups.
The council would include business representatives, in a bid to better understand what they see as major bottlenecks.
All of it aims to complement a new public-private contract framework unveiled last year for the power and oil sectors has so far only led to a handful of mostly small deals.
Under the new investment mechanism proposed by the bill, the government will retain a majority stake in major infrastructure projects, while ceding private companies the collection rights for a jointly-agreed period of time, said Jorge Mendoza, head of state development bank Banco Nacional de Obras y Servicios Publicos.
Using the example of a possible highway project, Mendoza explained that the government would seek to grant a concession to a majority-owned state company, such as sovereign infrastructure fund Fonadin, that would then contract with a private company and assign it collection rights from tolls and other services.
The private company would be tasked with handling the project’s construction, maintenance and operations.
“This company will provide capital and take on debt, secured by the collection rights granted by the concession,” Mendoza said.
“We’ll introduce a governance system, because although this contract involves private entities and collection rights, it has a shareholder known as the federal government.”
The bill will also allow for contracting of key infrastructure projects, subject to the Finance Ministry’s authorisation, even if the final budget allocation has not yet been secured.
It also seeks to improve a digital procurement platform to reduce project timelines and to allow the preliminary review of documents prior to a contract to prevent disqualifications due to procedural errors later.
The legislative drive is seen bolstering Sheinbaum’s “Plan Mexico” economic development blueprint, which has so far struggled to get off the ground.
Trade tensions with the United States have compounded the effort, in addition to more recent inflationary pressures stemming from the war in Iran, including rising prices for fertilisers as well as for motor fuels and natural gas that Mexico imports in large volumes.
Despite the headwinds, some business leaders expressed hope for a turnaround.
HSBC Mexico chief executive officer Jorge Arce said there’s optimism inside the banking sector regarding Morena’s new investment plan.
He said he believes lenders share the government’s rush to deliver new projects by expediting projects.
“There is a strong sense of urgency,” he said from the conference. “This must be done quickly.”
Arce pointed to projects in the energy sector, plus road and port construction, as generating the most interest in the financial sector, which he said is very receptive to Sheinbaum’s call to allocate more resources alongside public funding.
“Joint investment frameworks are highly bankable,” he said. “There will be interest.”
Key to ramp up the financing commitments will be to see details of concrete plans executed soon, added Raúl Martínez-Ostos, head of Barclays Plc for Mexico.
“There’s been quite a bit of back and forth with the government to define those rules of the game, and it’s really important to get a few things going,” he said.
“If the rules are clear, if Mexico is consistent and the president really gets involved and doesn’t have too many cooks in the kitchen, then there’s an enormous opportunity for our business.” — Bloomberg
