Economist Bernardo Vega does not feel there will be a turnaround in the short term so as to favor the candidacy of President Hip?lito Mej?a should he be elected the PRD?s presidential candidate for the May 2004 election.
Vega says that while export revenues have gained and imports are down, there are still many negatives. On the international scene he mentions that the price of petroleum has not dropped as expected. He says the government?s spending capacity is limited within the framework of an agreement to be signed with the IMF, which for now has been postponed until August. Furthermore, he says the government has to pick up the losses of the Central Bank and the costly Pan Am Games extravaganza, as well as the new social security system.
Making matters worse, it will need many more pesos to pay the foreign debt, while the pressures for wage increases are mounting. Inflation is forecast to hit 25% this year, with the year?s net total at 15%, and the country has yet to absorb any increase in the price of electric power. The government has already said power prices will be increased gradually.
Vega goes on to mention that the Baninter trial should make it difficult to sell the collapsed banks assets in order to cut losses there. Meanwhile, the Central Bank is obliged to pay out high interest rates to compensate the extraordinary 60% growth of money emissions from March to June and deposits in banks.