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Mexican finance minister steps down in wake of Donald Trump's visit Mexican finance minister steps down in wake of Donald Trump's visit
(about 1 hour later)
Mexican finance minister Luis Videgaray is stepping down, a spokeswoman at the ministry said on Wednesday, days after a visit to the country by Donald Trump and shortly before the government was due to present a 2017 budget with cuts needed to restore confidence after a surge in debt. Mexican president Enrique Peña Nieto is replacing his finance minister, Luis Videgaray, as the country confronts a deteriorating economic situation, increasingly deep debts and the consequences of inviting Republican candidate Donald Trump to Mexico – reportedly at Videgaray’s urging.
It was widely reported that Videgaray was a leading proponent of the visit to Mexico by the US Republican presidential candidate last week, a trip seen as something of a disaster for President Enrique Peña Nieto and a partial success for Trump. A finance ministry spokesperson told Reuters on Wednesday that Videgaray would not take another public position upon leaving cabinet. Social development secretary José Antonio Meade, a former finance minister under then president Felipe Calderón, is expected to replace him, according to media reports.
Videgaray will not take another public post, the spokeswoman said. Two people familiar with the matter said that Videgaray will be replaced by Jose Antonio Meade, a former finance minister. The spokeswoman could not confirm that Meade would become the new finance minister. The cabinet moves come as outrage continues to swirl over Peña Nieto inviting the US Republican candidate to Mexico – a decision urged by Videgaray, who wanted to send a signal to calm nervous markets, according to Mexican media reports.
Reuters contributed to this report “He probably thought it would make Mexico look good by receiving both candidates, that it would be seen as a solid message for the markets,” says Jonathan Heath, an independent economist in Mexico City. “I don’t think he imagined the backlash nor did he take into account the possibility that Trump would accept and Hillary [Clinton] would not nor that Trump would win so much and [Peña Nieto] lose so much.”
Videgaray was once seen as a star in Peña Nieto’s administration, which made a series of structural reforms in areas such as energy, education and the taxation system, while the foreign financial press ran effusive stories on his political skills and PhD from MIT.
Some analysts, however, say he simply did not meet expectations, with decisions such as raising taxes and increasing indebtedness by 10 percentage points in less than four years failing to produce results or meet the lofty promises of the Peña Nieto administration – such as annual economic growth of 5%.
“He advised [Peña Nieto] that if he got the structural reforms approved, Mexico would grow more, but it hasn’t,” says Heath. “He ends up his term in office with both Moodys and S&P considering downgrades because of macro imbalances, which was supposed to have been one of Mexico’s strongest points.”
The removal of Videgaray – one of Peña Nieto’s closest political collaborators and his campaign manager in a successful run at the presidency in 2012 – comes as the president confronts unprecedentedly low levels of unpopularity as his government deals with corruption and conflict of interest scandals, including revelations Videgaray purchased a property from a government contractor in 2012 and received a preferred interest rate.
“He was damaged goods for quite a while,” said Carlos Bravo Regidor, professor in the journalism program at the Centre for Research and Teaching in Economics. “The Trump fiasco is just an opportunity for him to take the heat and make effective an exit that was already long overdue.”
Videgaray’s reported replacement, Meade, appeared on Wednesday on the front page of one of Mexico’s leading newspapers, El Universal, defending the decision to invite Trump to Mexico. Many Mexicans, including media outlets once reticent to criticize Peña Nieto, have questioned the president’s judgement and unwillingness to criticize Trump during their joint press appearance on 31 August.
“It was a useful intervention for the country and useful for Mexicans,” said Meade, previously foreign minister under Peña Nieto. “Today the debate respecting immigration has turned completely to the recognition of what Mexicans do in their communities, here and there, and this is without doubt a positive result for Mexico.”