In an unexpected script twist, Arturo Herrera moves away from being the next governor of the Bank of Mexico (Banxico). The former Secretary of the Treasury had been proposed by President Andrés Manuel López Obrador in June to take the reins of the monetary institution early next year. An announcement well in advance that was interpreted as a move to generate confidence in the markets. However, his nomination proposal in the Senate has been withdrawn, as this newspaper has been able to confirm through sources in the Chamber. Neither the Presidency nor the former Secretary of the Treasury have commented on the matter. The delay in the final appointment after so many months of waiting had caused the opposite effect among investors these weeks, anxious about any setback in Banxico, one of the most prestigious and credible independent organizations in Mexico.

López Obrador had put Herrera’s name on the table in June, after anticipating that he was not going to support the continuity of the still governor, Alejandro Díaz de León, who ends his four-year term in December. Instead, he promised to promote a position committed to his political project. “He is going to be an economist with a social dimension, very in favor of moral economy,” he said then. López Obrador then explained that he sent the proposal to the Senate, the Chamber in charge of ratifying the appointment, where the majority of Morena and his allies have the numbers to approve the replacement.

Banxico is one of the most prestigious organizations for investors since its last reforms, in the 1990s, which protected its autonomy. Herrera’s unexpected fall comes amid a progressive rise in inflation and subsequent rate hikes by the monetary institution. And shortly after the controversial purchase of reserves from Banxico by the federal government. A legal but unusual maneuver due to the risks that the undercapitalization of reserves entails. The Government acquired 7,021 million dollars in one week. The largest purchase of international reserves since October 2008. Without specifying the destination of the item, the amount coincides with the cost of Pemex’s debt budgeted for this year.

A collaborator of the president since his time at the head of Mexico City, and with an international career within the World Bank, Herrera had entered Morena’s first government as a second-in-command at the Treasury. The spectacular departure of Carlos Urzúa in 2019, raised him to the head of the secretariat, piloting much of the management of the pandemic. After an ordeal of seven consecutive quarters of annual falls, the Mexican economy saw the light at the end of the tunnel in the middle of this year. GDP is heading back to equilibrium, but the ground to which it returns is very low and surrounded by uncertainty.

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