2018: AMLO to be more fiscally responsible than markets think

We said:

The 2019 budget bill appears likely to be fiscally prudent, aiding investor sentiment, even though fiscal erosion remains a growing medium-term risk in our view. The President-elect's economics team - acutely conscious that investors are anxious about the fiscal situation - has taken care to send the right signals on the 2019 draft budget. Equally encouraging, there are some signs that the economic team is quietly working to pare back some of AMLO's populist proposals in a bid to hew its 2019 budget target. 

Looking ahead, investor sentiment in Q4 will likely be dictated by two major issues. These are: 1) progress (or lack thereof) on NAFTA particularly in regards to Canada signing onto the preliminary US-Mexico agreement; and 2) the final 2019 budget proposal, which must be submitted by 15 December by the new government and passed before yearend. Our base case is that a fiscally responsible budget will be passed, especially given the encouraging signs sent thus far by AMLO's economic team. The fact that there are few penalties in store for the government should it spend more than its allotted budget, as the Pena Nieto administration has shown, is an additional incentive. 


In December 2018, the AMLO administration delivered a 2019 budget bill that was well-received by the market and helped to make the peso one of the best-performing EM currencies in the first four months of 2019. In H1/19, the government beat its primary surplus target by nearly 70%. 


18 May 2018
02 Feb 2005
01 Sep 2004
12 Aug 2004
05 May 2004
20 Jul 2000
01 Apr 1999
06 Jan 1999
01 Sep 1997
06 Jun 1995
10 Feb 1994
10 Mar 1993
06 Feb 1992
10 Dec 1991
03 Jan 1990



15 Apr 2016
16 Oct 2015
25 Nov 2013
20 Dec 2012
20 May 2004
03 Jul 2001


View our summary videos on fast trending topics. To listen to a recording of our Conference Calls, please get in touch with zdl@tslombard.com


Track Record

We have a 30 year track record of successful calls. Many of these calls combined economic, political and market analysis.



To request an interview with a member of our team, please get in touch zdl@tslombard.com .



Client Login

Don't have an account? CREATE YOUR ACCOUNT