Mexico’s federal government will provide 27.4 billion pesos ($2.1 billion) in aid to help the economy recover from the effects of the country’s swine flu outbreak, Finance Minister Agustin Carstens said.
The government will make available 17.4 billion pesos in tax benefits and other assistance to businesses most affected by the outbreak, including airlines, cruise ship operators, hotels and restaurants, Carstens said. State development banks will offer 10 billion pesos in additional credits, he said.
Consumer spending has plunged and the tourism industry has collapsed as the swine flu outbreak, which has killed 26 people in Mexico, prompts airlines to cancel flights, cruise lines to cancel trips and businesses to temporarily shut in the capital. The illness will cost the economy about 30 billion pesos, or 0.3 percent of gross domestic product, Carstens said.
“We believe these measures are adequate given the situation, given the short duration of the incident and that it has not had such a deep impact,” Carstens said at a news conference in Mexico City. “Financial markets are corroborating our opinion that the productive capacity of the country hasn’t been destroyed.”
Theaters, nightclubs and dine-in services in restaurants have been shut since last week in Mexico City. Schools in some areas shut April 24 ahead of the nationwide shutdown declared last week.
Carnival Corp. and Royal Caribbean Cruises Ltd., the two largest cruise-ship operators, suspended stops at Mexican ports last week to avoid the flu outbreak.
The nation’s revenue from tourism may fall 43 percent to $7.6 billion this year because of swine flu, Tourism Minister Rodolfo Elizondo said in a May 2 interview on Radio Formula. Tourism is Mexico’s third-largest source of foreign currency after oil exports and remittances from overseas.
The government said yesterday that most of Mexico will return to work tomorrow and universities and high schools will reopen May 7.
Health Minister Jose Cordova has said the epidemic is in a “declining phase” and appears to have “contained itself.”
The measures announced today include a 20 percent discount on company payments on employee health benefits to the social security system in May and June, the Finance Ministry said in a statement.
Airlines will receive a 50 percent discount on taxes they pay to use airspace in April, May and June, according to the statement.
The government will also provide 3 billion pesos in loans and loan guarantees to airlines and 1.1 billion pesos in aid to pork producers, Carstens said. State governments will provide 1.4 billion pesos in tax benefits, the statement said.
“Demand for certain products and services has fallen temporarily,” Carstens said. Still, he said, “we’re in a very good position for the impact of this pandemic to be strictly transitory.”