Standard & Poor’s, the rating agency, on Tuesday shifted its outlook on Mexico’s sovereign credit rating to “positive” from “stable” and signalled a possible upgrade during the next 18 months.
The change, which confirmed the country’s BBB foreign currency and A- local currency ratings, comes as centrist President Enrique Peña Nieto forges ahead with the most ambitious reform proposals in decades.
On Monday, Peña Nieto of the Institutional Revolutionary Party (PRI) unveiled proposals to shake-up the telecommunications and broadcasting sectors with the aim of stimulating more competition, driving down prices and increasing investment.
At least two more reforms – to increase tax revenues and to open up the highly protected oil and gas sector – are expected in the second half of this year. Altogether, the administration is betting that the reforms could raise growth to 6 per cent a year from about 4 per cent currently.
In a statement on Tuesday, Lisa Schineller, an analyst at S&P, said that the positive outlook “reflects a greater than one-in-three chance that the government will successfully advance policies to further strengthen Mexico’s fiscal room for manoeuvre and medium-term growth prospects”.
While this had not been possible under the two previous administrations, in part because of their “contentious nature”, Schineller said, “the government now has a higher likelihood of gaining approval for such policies, due in part to the president’s stronger political capital”.
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