Peña Nieto expands power as reform beckons

Financial Times ^ | March 3, 2013 | Adam Thomson

[JerseyanExile]

Mexico’s ruling party has substantially increased the president’s power and cleared the way for an ambitious agenda of economic reforms.

Institutional Revolutionary party (PRI) members convened for their national assembly agreed on Sunday to open the possibility of creating a bigger role for private investment in the protected energy sector, as well as changing the party’s position on extending value added tax to certain foods and medicine.

The changes, which brush away internal rules that have barred PRI members of congress from backing such measures, are a necessary first step in Enrique Peña Nieto’s plans to pass energy and tax reforms this year. Mr Peña Nieto, a 46-year-old former state governor, is pinning his presidency on these reforms to turn Latin America’s second-largest economy into one of the world’s most dynamic emerging markets with annual average growth rates of up to 6 per cent – up from between 3 and 4 per cent now.

The idea is to blow open Mexico’s resource-rich but underdeveloped oil and gas sector in a way that could attract tens of billions of dollars in private investment in the coming years. At the same time, the government hopes that tax reform, including extending VAT to processed foods and medicine, could deliver the necessary funds to pay for infrastructure and social development programmes.

In addition to the changes to the PRI’s internal statutes on VAT and energy, PRI delegates appointed Mr Peña Nieto head of the party’s permanent political commission. The move ramps up Mr Peña Nieto’s clout within the party, placing him at the centre of the PRI’s most important decision-making body.