By Natsuko Waki
LONDON Jan 27 Mexico is attracting foreign
investment thanks to growth-enhancing reforms, the country's
finance minister said on Monday, adding that market volatility
would subside once investors focus on good economic
A broad emerging-market sell-off that started last week has
weighed on Mexico, where the peso sank to an 18-month low
against the dollar and the benchmark equity index touched
its lowest level since November on Friday.
But investors will differentiate once the risk aversion
subsides, Luis Videgaray said, with Mexico's prospects for
growth attracting foreign investment.
"There's good momentum for foreign direct investments to
Mexico," Videgaray told a briefing. "It's because of
expectations of future growth. The reform process will
accelerate the growth prospect. We expect a stampede-type of
effect we saw last week will abate.
"Mexico is still an emerging economy, very open economy, so
it's natural we experience some volatility, but we're in a much
better shape than many other economies."
Videgaray was in London to receive the Finance Minister of
the Year award from the Banker magazine. Last week, he and
President Enrique Pena Nieto announced a $7 billion investment
deal from PepsiCo, Nestle and Cisco in Davos.
Growing confidence in the government's economic reforms
earned Mexico a ratings upgrade from Standard & Poor's in
December. It is relatively well-placed among emerging economies
thanks to its current account.
Videgaray said the country is exploring more FDI
opportunities from China and Europe. For now, the United States
remains the main source of foreign investments. He also said he
expected no changes in taxation policy for the next few years.
Mexico's Congress passed President Pena Nieto's new tax
scheme in October. The fiscal overhaul includes higher income
tax rates for the wealthy and new levies on junk food, soft
drinks and stock market gains.
Mexico once had the lowest tax revenue in the 34-nation
Organisation for Economic Co-operation and Development. That
curtailed spending on health, infrastructure and social programs
needed to boost living standards in Latin America's
"The President and workers unions and the private sector
will be signing an agreement next month where there will be
commitment not to change any of our taxes in years to come.
We expect no changes in taxation for at least the next 3 years,"