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Mexico real estate to continue benefiting from investment while President cuts back government spending

Thomas Lloyd

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While the President of Mexico, Felipe Calderon, has guaranteed that Mexico real estate will continue to see the benefits of what he has called the presidency of infrastructure, the President is also showing his commitment to responsible spending by cutting the expenses of the federal government. Those investing in Mexico real estate can be confident that the current government will continue to invest in and seek private investment for the tourism industry that has helped make the key real estate destinations in Mexico viable for non-Mexican investors.

Along side of this commitment to investment, the President presented a fundamental reform of public administration on the second Tuesday of September. In the reform, several federal ministries will disappear which, along with other measures, will save nearly 80 billion pesos, allowing the government to continue its investment in infrastructure and other aspects benefiting the Mexico real estate industry.

In a message from the official residence of Los Pinos, the President said the proposal included the elimination of the Ministry of Tourism; however, the duties of this Ministry will be transferred to the Ministry of the Economy, and this industry, key both to Mexico real estate and to the economy of the entire country, will not be neglected.

The other Ministries to disappear are that of Agrarian Reform will - its responsibilities will be passed to the Ministry of Social Development and Agriculture. The disappearance of the Ministry of Public Administration is also being proposed, whose core activities will processed by the Comptroller General of the Federation, reporting directly to the President.

In the Manuel Avila Camacho room of Los Pinos, the president announced the proposal to reduce the high command structures of the federal government, and to adopt a policy of freezing the salaries of senior and middle government administration in 2010 for the seventh consecutive year.

He explained that if one adds the 10 percent decline in the wages of senior administration instated at the beginning of his government, which continues to date and will continue to be effective in 2010, the purchasing power of these public servants have fallen by almost 40 percent in the recent years in real terms.

Accompanied by Secretary of Treasury and Public Credit, Agustin Carstens, President Calderon proposed cutting spending in Mexican embassies and representations abroad, as well as delegations from the Ministries of the federal government in the states.

Additionally, he noted that the steps taken this year to reduce spending in administration and operating the federal government will be more extensive, reducing travel, counselling and consulting expenses.

Calderon stated that the proposal being sent to Congress is “a drastic and unprecedented adjustment" in the area of public spending. He emphasized that those measures mean an unprecedented effort by the federal government of an amount that could reach up to 80 billion pesos, only on savings and spending reductions. However, he also insisted that it is “not enough".

He commented that it is necessary to extend efforts to strengthen state finances as a result of the economic crisis, declining oil revenues and hydrocarbon production, and lowering reducing prices of the same resources.

He indicated that, in total, taking into account the savings from cut-back effort and resources gained from material changes in tax during 2010 will generate additional resources of more than 180 billion pesos, equivalent to 1.4 percent of the country's Gross Domestic Product.

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