MEXICO CITY (Reuters) - Mexico’s finance ministry and banking regulator extended tools to allow banks and financial intermediaries to restructure loans and other credits to clients, senior officials said Wednesday, in the government’s latest push to help an ailing economy.
The measures will extend until next year several temporary rules designed to avoid defaults and loss of collateral, in what Finance Minister Arturo said was a recognition that the economy will remain fragile for some time.
“It’s no longer a horizon of a few weeks,” said Herrera, “but a few months.”
The steps include relaxing liquidity requirements until next March, extending a capital buffer through the end of 2021, and an 18-month relief for farming credits.
Juan Pablo Graf, head of Mexican banking regulator CNBV, said he expected increases in debt delinquencies and debt stress in key industries such as tourism, which has fallen sharply since the pandemic began.
But the government does not intend to expand spending to strengthen the economy, Herrera noted, adding that he saw a slow recovery after the rapid slump during pandemic lockdown measures.
The government of President Andres Manuel Lopez Obrador has mostly maintained frugal spending since he took office nearly two years ago, opposing tax increases, new debt and bailouts for businesses.
Herrera, Lopez Obrador’s second finance minister, said the government decided to extend the financial breaks due to the economic crisis.
“We now have to generate additional conditions that allow the Mexican financial system to be reorganized to continue to allow (better) terms for companies and families,” said Herrera.
Mexico’s peso suffered its steepest losses since June on Wednesday, slipping more than 3% against the dollar, on concerns spread about rising coronavirus infections in Europe.
Reporting by Sharay Angulo; Writing by David Alire Garcia; Editing by Frank Jack Daniel and Richard Chang
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