Debt eats into budgets and food production plummets | Article by Alberto Vizcarra Ozuna

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Alberto Vizcarra Ozuna

Unconditional obedience to the government Andres Manuel Lopez Obrador macroeconomic criteria imposed by debt holders and investment funds will inevitably lead to the current fiscal crisis. This is precisely what the government of Claudia Sheinbaum is suppressing, from which the Ministry of Finance – as an enclave of the financial sector – is demanding budget adjustment more than the one applied at the beginning of the government of Ernesto Zedillo, during the unforgettable crisis of 1994 inherited by the government of Carlos Salinas de Gortari.

With the budget adjustment planned for 2025, the flawed developments of López Obrador, who assumed the possibility of coexistence with neoliberal macroeconomic policiesuntil corruption was eliminated. He insisted that the results of the fight against corruption would generate sufficient funds to enable the state to maintain the level of public investment that would enable economic growth and service delivery. Using this elementary vision, he included the running costs of infrastructure and recycling oilwhich required capital budgets backed by credit policies rather than pumping out government spending.

López Obrador did not decide to pursue a sovereign credit policy to avoid conflict with the financial sector and debt holders. As a result, Claudia Sheinbaum faces a budget crisis more serious than the one Carlos Salinas inherited from Ernesto Zedillo. During the 1994 crisis, an operation was carried out “save”, coordinated by the United States government, which collected $40 billion transferred as debt to Mexico to prevent a possible payments crisis from putting the international financial system in a difficult position. What in those years was debt to pay off debt now becomes an adjustment whose amount of reduction – again to pay off debt – is equivalent to $50 billion.

Fiscal adjustment programs, that is, spending cuts to reduce budget deficits, are the orthodox procedures specified in the manuals of neoliberal doctrine. They gained strength in the midst of the global South payments crisis at the beginning of decade of the eightieswhen the terms of government debt refinancing were subject to these adjustments and budget cuts to ensure debt repayment. In those years, due to the severity of such measures, they were called “draconian cuts.”

It has since been documented that such measures are not beneficial economic growthrather they return declinewhile government spending ceases to act as a driving factor for the economy as a whole. These are policies that ultimately reinforce the inertia of the crisis and maintain a vicious circle of stagnation and adjustment; medicines that are worse than the disease itself.

There are those who say that the adjustment is moderate, and this may be compared with the cuts made by the Miley government in Argentina (30 percent), which boasts that it is “the largest in human history”; But compared to the reduction applied by Brazil (1 percent), Mexico’s cut (15 percent) can be considered draconian. The biggest problem is that the route to the halfway point of Sheinbaum’s six-year presidency has already been mapped out. budget cut policy which offers to accumulate an amount $100 billion by 2027with the goal of getting closer to zero deficit. Everything is regulated to meet debt service obligations, which already eat up 15 percent of the budget, and to win the approval of the rating agencies that oversee insatiable investment funds.

In the section you can see ending subsidiessharp cuts in capital expenditure and paying down the financial cost of debt appear to be an inevitable obligation. In this hierarchy harm to healthwhich includes the direct provision of medical care, the construction of hospitals and everything related to specialized medicine; and education, research, and infrastructure related to water, transportation, and energy management.

When Mexico entered into these adjustment schemes, at the beginning of the government Miguel de la Madrid (1982) a phrase was coined to justify the blows to the economy and population: “painful but necessary measures” And in this scheme, the Mexican countryside suffered the most. As farmers often say, during a crisis, “the weakest dog gets fleas.”

About him Mexican countryside was thrown back with greater force and frivolity abandonment to meet the requirements of the national debt. The countryside has suffered from stagnant budgets for decades, but budgets have fallen in real terms in recent years. Despite the enormous impact of the drought on the country’s irrigation areas and the accumulated decapitalization of producers, the government has decided not to change the policy of cuts in the sector. The emergency situation, which has left more than a million hectares unplanted in the current autumn-winter cycle, has not been eliminated and is affecting the main grain-producing regions of the country, which will lead to a vertical drop in the production of wheat and corn. , beans and sorghum.

Gross estimates offered by the same manufacturers claim that a million tons will not be collected sorghum, one million tons of yellow corn, four million tons of white corn, two million tons of wheat and more than 200 thousand tons of beans, if you count only the regions of Sonora, Sinaloa, Chihuahua and Tamaulipas. Obviously, the decline in production will be more significant if it is joined by other regions also affected by drought and pricing policies dictated by international speculative markets.

The Sheinbaum government got off to a bad start by accepting this brutal package of cuts and subject themselves to policies that leave their government and the vast majority of Mexicans without a future.

From Yaqui Valley, Ciudad Obregon, Sonora, December 5, 2024.