Citibanamex warns that AMLO’s reforms put Mexico’s economy at risk

The controversial constitutional reforms proposed by President Andrés Manuel López Obradorwhich are expected to be submitted for approval in Congress in September, could seriously compromise the democratic structure and legal stability of Mexico, according to a Citibanamex analysis.

These reforms, particularly the one that seeks modify the composition and election of the Judicial Branch of the Federation (PJF)are seen as a direct threat to judicial independence and a weakening of electoral guarantees in the country.

The Citibanamex report warns that the president’s initiative for judges, magistrates and ministers of the Court to be elected by popular vote could undermine the PJF’s ability to act as an effective counterweight to the executive branch.

Besides, The proposed electoral reform is also perceived as a setback in the legal and equitable competition for power in Mexico, being able profoundly alter governance and political and legal certainty.

Citibanamex compares the potential approval of these reforms in September with the “December mistake” of 1994, a critical moment in Mexico’s economic history that triggered a severe crisis.

According to the bank, the hasty implementation of these measures could structurally weaken the initial conditions for the next government of Claudia Sheinbaum Pardonegatively affecting the perception of legal and political certainty in the country.

Since Sheinbaum’s election, The Mexican peso has suffered a cumulative devaluation of 10.38% against the dollarreflecting the nervousness of the market.

The Mexican Stock Exchange also registered a 4% drop last weekevidencing the adverse reaction of the markets to the increase in political risk.

Citibanamex suggests that The approval of these reforms could lead the country towards a path of institutional weakeningelimination of checks and balances and greater political centralization, which would deter investment and weaken Mexico’s macroeconomic stability and growth prospects.