Event

Enrique Pena Nieto, from the Institution Revolutionary Party (PRI), has been elected as President for a six-year non-renewable mandate, succeeding President Felipe Calderon from the National Action Party (PAN). Runner-up Andres Manuel Lopez Obrador refused to admit defeat as he did after the 2006 presidential election, when he occupied street for several months. He is likely to contest the results by legal means rather than to rally his supporters to protest. The election of Mr Pena Nieto marks a return to the PRI – which dominated the political scene between 1929 and 2000 - after 12 years. It is not yet clear whether the PRI has landed the majority in both houses of Congress, but the uncompleted results suggested the PRI and allied Ecologist Green Party of Mexico PVEM failed to win the working majority, leaving the party reliant on other parties to pass key energy and fiscal reforms. After all, energy reform is crucial as oil production has been dwindling for more than a decade due to the lack of investment and technology. After all, since the expropriation of oil companies and the creation of state-owned oil company Pemex, no foreign company is allowed to invest in the oil sector. Fiscal reform is also needed as public finances are heavily reliant on oil revenues. The new administration would also have the difficult challenge to restore public security without jeopardising the war against drug cartels. Mr Pena Nieto already announced that he will not pact with organised crime.

Impact on country risk

No major political shift is expected following the election of Enrique Pena Nieto. As first results indicated that the PRI failed to win the majority in both houses of Congress, it will be difficult to adopt energy and fiscal reforms. Nevertheless, it is crucial to pass such reforms as public revenues are highly reliant on oil. The oil sector needs investments and new technology to be able to step up production. Country risk classifications are stable. MLT political risk could even be upgraded if key reforms are adopted.

Analyst: Pascaline della Faille, p.dellafaille@credendogroup.com