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MEXICO-ECONOMY-RATING-AIRPORT
Fitch cites airport cessation in negative Mexico outlook
MEXICO CITY, Nov 1, 2018 (BSS/AFP) – Fitch on Wednesday affirmed Mexico’s
long-term BBB+ debt rating but revised the outlook to negative, after
president-elect Andres Manuel Lopez Obrador said he will halt a multi-
billion-dollar airport project.
Downgrading the outlook from stable reflects “the deteriorating balance of
risks confronting Mexico’s credit profile associated with scope for policy
uncertainty and deterioration under the incoming administration,” Fitch said
on its website.
Lopez Obrador on Monday said he will halt construction of Mexico City’s
new airport in line with the wish of voters who rejected it in a referendum.
The estimated cost of the airport exceeds $13 billion.
Fitch said the decision “sends a negative signal to investors.”
The agency added that it expects the new government to continue to embrace
budget discipline and autonomy of the central bank, but risks related to the
incoming administration’s fiscal stance persist.
Some promises in the platform of Lopez Obrador’s Morena party, including
an increase in social transfers and pensions, “may be difficult to
accommodate within the budget framework,” Fitch said.
The two other major ratings agencies, Moody’s and S&P, already maintained
their ratings on Mexico’s debt.
Lopez Obrador has been a staunch critic of the airport project’s
environmental impact and said it is marred by corruption.
Business leaders said the airport was sorely needed.
His announcement led to falls on the stock market and in the peso, which
lost 1.26 percent on Wednesday to 20.30 to the dollar.
Mexico’s economy is Latin America’s second largest and recorded growth of
0.9 percent in the third quarter, according to preliminary figures from the
national statistics agency.
The referendum which rejected the airport was not organized by the
national electoral authorities and critics have pointed to cases of voters
casting multiple votes.
Dropping plans for the new airport would cost $20 billion to the economy
annually, Peter Cerda, vice president for the Americas with the International
Air Transport Association, has said.
BSS/AFP/HR/0955