MEXICO CITY Nov 26 Mexico's recent tax overhaul
does not do enough to curb the government's dependence on oil
revenue while other major reforms may not boost economic growth
as much as authorities forecast, the International Monetary Fund
said on Tuesday.
Mexico, Latin America's second biggest economy, has made
"impressive" strides" in passing a series of major economic
reforms that will help boost growth, the IMF said in a report
after its annual health check of Mexico's economy.
However, the Washington-based IMF said "further efforts are
likely to be needed" to improve non-oil income after lawmakers
approved a tax bill at the end of October that was less broad in
scope than the market had expected.
"With the prospect of declining oil production over the next
decade, the federal government needs to beef up its collection
on non-oil revenues," the IMF said in a report on the fiscal
reform that accompanied its so-called Article IV consultation
with Mexican authorities.
Those remarks come as another government reform is moving
through Congress that aims to open up the state-controlled oil
industry to private investors and boost crude output, which has
fallen by a quarter since 2004.
Excluding revenue from state oil firm Pemex, Mexico's
government only collects taxes worth about 10 percent of its
gross domestic product, far less than its main peers in Latin
America or in more developed economies.
Last month the IMF slashed Mexico's 2013 growth outlook to
1.2 percent, down from the 2.9 percent it forecast in July,
after the economy contracted in the second quarter on a slump in
construction and weak government spending.
Data released last week showed Mexico's economy picked up
steam in the third quarter to its fastest pace in over a year,
and growth is seen strengthening in 2014.
The IMF expects the Mexican economy to grow 3 percent next
year. Its report said that President Enrique Pena Nieto's reform
program would lift annual average growth in 2015 to 2018 to
between 3.5 percent and 4 percent, up from a previous estimate
of annual growth rates of 3 percent to 3.25 percent.
The IMF outlook is more conservative than the Mexican
government's estimates that growth will expand to 5.2 percent by
2017 and even higher in following years under the combined
effect of telecommunications, banking, energy and tax reforms.
"The authorities believed that the reforms would have a more
profound effect on growth," the IMF said. "The effects are
difficult to measure at the beginning of this potentially
The government hopes Congress will pass the energy bill
aiming to draw investment to the oil industry before the end of
2013, but analysts expect its impact to take time.