By ABC (Business) | Created at 2024-12-10 19:26:08 | Updated at 2024-12-22 17:21:31
1 week ago
MEXICO CITY -- Truck drivers blocked some major highways in central Mexico on Tuesday to protest that the government hasn’t paid them for work they did on a tourist train line.
The protest by truckers blocked two major highways leading north out of Mexico City for a few hours Tuesday morning, and other highways on the Yucatan Peninsula, where they had worked carrying gravel and other materials for the government's Maya Train project.
President Claudia Sheinbaum acknowledged Tuesday that the subcontractor companies that hired the truck drivers hadn't paid them because the government owed them money.
“The payments to the companies have started, so that they, in turn, can pay the truck drivers,” Sheinbaum said.
It was the latest in a series of complaints by workers and businessmen who said the cash-strapped government has fallen behind in payments.
Mexico’s federal government is running big budget deficits to pay for ambitious pet projects and entitlement programs from the previous administration.
Last month, suppliers and contractors for the state-owned oil company published an open letter saying they hadn’t been paid $5 billion for work they had done.
“This situation ... has caused adverse affects on our finances and on the regions where we work,” the Mexican Association of Petroleum Services Companies wrote in the letter.
Under former President Andrés Manuel López Obrador, who was Sheinbaum’s political mentor, the government began transferring large amounts of money to the state-run Pemex oil company, started large building projects and implemented cash handout programs.
That led to federal budget deficits of about 6% of Mexico’s gross domestic product in 2024. Mexico’s treasury department said it would aim to reduce the deficit to 3.9% of GDP in 2025, but it was unclear if it could achieve that. López Obrador left behind a lot of unfinished train and oil refinery projects, and Sheinbaum has expanded benefit programs for older people.
In November, the Moody’s ratings agency said it had downgraded the government’s debt outlook from “stable” to “negative” while reaffirming Mexico’s Baa2 overall credit rating, saying increased government debt represented a risk for Mexico.
The cash crunch has left Sheinbaum scrambling to find money with new and unusual taxes and funding sources.
Earlier this week, Sheinbaum said that much of the money gained by eliminating independent oversight and regulatory agencies will go to the army to fund a rise in soldiers’ pay.
In November, Mexico’s Congress approved charging every cruise ship passenger a $42 immigration fee, with much of that money also going to the armed forces.
López Obrador and Sheinbaum have put the army in charge of everything airports, airlines and train lines, and many of the military-run projects appear to be big money losers, which may help explain the government’s urge to find extra funding for the armed forces.
For example, the army largely built the “Maya Train,” a tourist line which runs in a loop around the Yucatan Peninsula. But the train has drawn only 20% of the ridership expected when it was proposed.
The Maya Train started service on Dec. 16, 2023. While it’s not completely finished — two relatively little-used stretches are scheduled to enter service later this month — the most popular and heavily-travelled parts of the line are already in service.
As of Dec. 8, authorities announced the train line had carried a little more than 600,000 passengers in its first 51 weeks. That is only one-fifth of the 3 million passengers authorities had claimed it would carry per year.
