Diane Lindquist

In nominating Finance Minister Agustin Carstens on Wednesday to become governor of the Bank of Mexico, President Felipe Calderon seeks above all to "coordinate" and "harmonize" the relationship between the central bank and the federal government on fiscal and monetary policies.

The selection of Carstens removes current Gov. Guillermo Ortiz, who has dueled publicly with the president on the management of interest rates and economic forecasts, and installs a trusted partner with whom Calderon has been working in close collaboration since before taking office three years ago.

In addition, the selection of Ernesto Cordero to replace Carstens as Finance minister and Heriberto Felix to take the reins at the Ministry of Social Development elevates two men in the narrow circle around the president, although they have few credentials for their new jobs.

Cordero, who like Calderon was a student at the clubby, private university ITAM, served at his side during the presidential campaign as coordinator of public policy.

The president's consolidation and elevation of like-minded officials comes amidst growing criticism that Mexico has failed to make significant economic advances addressing its global competitiveness and widespread poverty because it is guided by a system of crony-capitalism with too many vested interests to maintain.

"For too long," notes ITAM political science professor Denise Dresser, "government officials have tinkered with Mexico's economic structure through piecemeal reforms that seek to ensure political stability but do not address the key obstacles to greater innovation and competitiveness."

Carstens encountered these same charges when he promoted the president's 2010 budget proposal in Congress. He faced criticism at how he - and Calderon - faced the economic crisis.

Although some senators took issue Wednesday with his selection, the Senate is expected to approve with little dissent Carsten's appointment to rule the central bank from 2010 to 2016.

In the nomination ceremony at the Los Pinos presidential palace, Calderon acknowleged the concerns about the selection of someone who so closely shares his views.

While saying that the federal government will work in coordination with the Bank of Mexico to design and implement monetary, fiscal and exchange rate policies, the president stressed that the Bank of Mexico will continue to operate independent of the administration.

His government would work in "close coordination" with the bank, Calderon said, but without detriment to its full autonomy.

Diane Lindquist is the publisher of mexbiznews.com

Mexico appears on the verge of jump-starting its lagging multi-billion-dollar infrastructure program, created to boost the country’s economic performance and global competitiveness and pull it out of the recession.

If the projects, including the massive Baja California port-rail project at Punta Colonet, are realized, the effort might rescue the reputation of President Felipe Calderon whose reform agenda has faltered.

Calderon in July 2007 launched the National Infrastructure Program, which identified more than 300 infrastructure projects to be financed through public-private partnerships, with significant Mexican public sector investment.

The program was to have been a step toward boosting Mexico’s gross domestic product from 3 to 8 percent by the year 2012. It presented opportunities for investment of more than $141 billion for domestic and foreign films, with projects ranging in size from $45 million to $5 to $8 billion for the Colonet port-rail project.

Calderon’s commitment to the program continued as the economic crisis deepened because it was seen as an employment generator to help workers who were being shed from their jobs.

But companies that were suffering their own setbacks were unwilling to commit to the projects, and financing from lending institutions almost completely evaporated.

More than two years into the five-year National Infrastructure Program, less than a third of the projects have gotten underway despite the efforts of the Calderon administration.

A recent study presented at the International Congress at the Enterprise College at Huixquilucan said half the projects should have been completed by now.

As Mexico emerges from the recession, however, there have been signs of renewed efforts to get the infrastructure projects underway. Measures include reworking the projects to tapping new sources of public and private financing.

The Colonet port, for instance, is being drastically downsized to receive 1 million TEUs annually rather than the 6 to 8 million TEUs originally projects. Cost of the project is expected to shrink from $5 to $8 billion to $1 billion.

Calderon meanwhile has sent a package of initiatives to Congress seeking to tap into the country’s 17 retirement accounts, or Afores, valued at more than $80 billion. If approved, government spending on infrastructure is expected to multiply three or more times with the participation of private capital.

At the same time, private companies are showing renewed interest.

Mexican construction company Empresas ICA and Goldman Sachs Infrastructure Partners set the ball rolling on infrastructure trusts, selling a $477.3 million state in a toll road concession.

The Australian investment bank Macquarie Group is joining with the Mexican government to create a $1 billion fund to invest in the country’s infrastructure. And Singapore wealth fund Temasek was being paid a visit by Calderon during his attendance at the APEC summit to gain its interest in such projects.

It still is too early to tell if these efforts will revive the ambitious infrastructure vision of President Calderon. But completion of even a portion of the projects will boost Mexico’s economic development.

Diane Lindquist is publisher of mexbiznews.com.