It was announced on the official social media account of Mexican President AMLO that strengthening the MSMEs would help overcome the economic crisis caused by the COVID-19 pandemic.

Before this statement, Lopez Obrador announced he ensured that the Finance Ministry would not permit the program to take place due to how he misconstrued the nature of the arrangement. Lopez Obrador said he would not allow these banks to give loans that might become public debt should they not be paid back.

"We can't give preferential treatment to those who have economic means," he added, asking for consideration for those living in poverty in the country.


A Separation of Economic and Political Power

At the news conference last Tuesday, the president claimed that there would likely be corruption in the loan scheme program by the Inter-American Development Bank and the Mexican Business Council, also known as IDB Invest and CMN, respectively.

Lopez Obrador went on to say that top-down schemes that he suspected the program by IDB Invest and CMN of attempts at company corruption disguised as opportunities to financially support businesses and the economy, calling them "bailouts."

Mexican Business Council president Antonio del Valle said that the president misunderstood the nature of their program.

In response to Lopez Obrador, del Valle clarified by saying this endeavor was a private operation, which meant there would be no increase to the public debt. He said, "There is no loan guarantee, no resources from the government or the public sector."

Following this clarification, Lopez Obrador responded that he would allow the IDB Invest and CMN loan program to proceed with their efforts since they said they would not involve the federal budget. Nonetheless, the president said the federal government would monitor their operation closely.

Initially, the program was supposed to include the support of the Finance Ministry, which Lopez Obrador rejected because he feared a greater public debt. He added, "There is a separation between the economic power and the political power."


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Banks Support Businesses With Loans Worth US$12 Billion

The IDB Invest, which was the development bank's private sector arm, and the Mexican Business Council, a conglomerate of Mexico's largest businesses, have announced holding a program that will seek to benefit micro, small, and medium-sized enterprises with loans worth $12 billion.

Other participants of the program will include local commercial banks, international investors, and other development banks. Micro, small, and medium-sized businesses are offered loans at considerably low rates.

The CMN estimated there was over 4 million micro to medium-sized businesses in Mexico, which meant that they make up 42% of the gross domestic product and 78% of employment. A representative for the IDB, Tomas Bermudez, said the program would seek to complement the austerity measures of the federal government to support the businesses.

The program is aiming to offer revolving credit lines to companies that would last up to 90 days. In addition to that, IDB Invest and the CMN would also plan to develop another program that would be designed to complement present plans being run by the IDB in Mexico factoring lines of credit.