On 20 November a bill authorising the disappearance of seven autonomous regulatory agencies was passed by Mexico’s lower chamber of congress in a 347-128 vote.
Analysis:
The bill is part of a package of 20 constitutional reforms announced last February by then-president Andrés Manuel López Obrador (2018-2024) and also supported by his successor, President Claudia Sheinbaum. The seven agencies include the anti-trust and competition watchdog Comisión Federal de Competencia Económica (Cofece), telecoms regulator Instituto Federal de Telecomunicaciones (IFT), and data protection office Instituto Nacional de Transparencia, Acceso a la Información y Protección de Datos Personales (Inai).
- The governing coalition, led by the left-wing Movimiento Regeneración Nacional (Morena) used its large majority to approve the reform “in general” pending further discussion “in particular” and consideration of the bill in the senate.
- Morena deputies repeated the government line that the functions of the agencies will be transferred to government departments where they will be conducted more efficiently. Morena deputy Katia Alejandra Castillo denied that the transfer was a power grab, arguing that its aim was to “restructure and simplify government, rationalise the use of resources and optimise public administration”. Government officials have said eliminating the agencies will save US$5bn a year and reduce corruption risks.
- Opposition deputy Irais Virginia Reyes of the leftist Movimiento Ciudadano (MC) argued in contrast that the autonomous agencies have been a necessary counterweight to the power of government, protecting transparency, individual rights, and guarantees.
- The government will have to make special arrangements for IFT since its free trade agreement with the US and Canada (known as USMCA) requires each signatory to have a telecoms regulator.
Looking Ahead: A significant risk for the government is that Mexico’s credit rating could be negatively affected. At present Mexico benefits from an investment-grade rating from Fitch, Moody’s, and S&P. But Moody’s recently downgraded the outlook for the country to ‘negative’ from ‘stable’, citing institutional and policy weakening. According to Gabriela Siller, the head of economic analysis at Mexican private bank Banco Base, the elimination of autonomous agencies “implies a further deterioration of Mexico’s institutional framework, which increases the likelihood of credit rating downgrades”.