López Obrador’s Cash Giveaways Spark Economic Debate in Mexico’s Final Presidential Days

Mexico’s Outgoing President Makes Controversial Cash Giveaways

In a surprising move just days before leaving office, Mexico’s President Andrés Manuel López Obrador has announced generous cash giveaways to allies in a radical union movement. This decision has raised eyebrows among analysts who describe López Obrador’s policies as contradictory, noting a pattern of cutting government services while funding pet projects and political supporters.

The president granted an electrical workers’ union approximately $95 million annually in unearned pension benefits, calling it “an act of justice.” These workers, laid off in 2009 from a debt-ridden government power company, have been staunch supporters of López Obrador’s presidential campaigns. Despite not having enough years to retire, they will now receive pensions under this new arrangement.

This is not the first instance of such generosity. Last year, López Obrador allocated about $45 million to former workers of the defunct government-owned airline Mexicana to acquire trademark rights, despite their questionable commercial value.

These actions stand in stark contrast to López Obrador’s cultivated image of extreme austerity since taking office in 2018. He has eliminated federal oversight agencies, reduced federal revenue sharing for state governments, and cut local police funding, citing the need to avoid a “rich government with poor people.”

However, the government has borrowed heavily to fund López Obrador’s pet projects, leading to a deficit equivalent to 5% of GDP. This borrowing spree has complicated the central bank’s efforts to control inflation, which currently stands at 5% annually.

Gabriela Siller, director of economic analysis at Banco Base, stated that these contradictory policies have negatively impacted Mexico, resulting in less physical investment and higher debt.

In a separate development, López Obrador expropriated a $1.9 billion property on the Caribbean coast owned by U.S. firm Vulcan Materials, declaring it a nature reserve. The company has accused the administration of violating the U.S.-Mexico-Canada free trade agreement.

The president has also engaged in public disputes with business magnates, including retail, TV, and banking tycoon Ricardo Salinas Pliego, over alleged unpaid taxes.

As López Obrador’s term comes to an end, these final actions have intensified the debate surrounding his economic policies and their long-term impact on Mexico’s financial stability.