2003 budget calls for continued fiscal discipline but includes some tax relief investors should find comforting.   The Me xico Ministry of Finance and Public Credit, or Hacienda, provides this summary.

Macroeconomic framework for 2003

      The main economic projections incorporated in the Economic Program approved by Me xico ’s Congress are in line with those included in the Economic Policy Guidelines for 2003.

      In particular, the macroeconomic framework for 2003 projects a real GDP growth rate of 3.0 percent; an inflation rate no higher than 3.0 percent; a current account deficit to GDP ratio equivalent to 2.8 percent; a real annual growth rate of the U.S. economy of 2.5 percent; and an oil export platform of 1.86 million barrels per day

      However, Congress approved an upward revision to the average price of the Me xican oil mix from 17.0 to 18.35 dollars per barrel.

      In 2003 fiscal discipline will remain the cornerstone of the economic program. In particular, the fiscal package approved by Congress is consistent with an overall public sector deficit equivalent to 0.50 percent of GDP. Similarly, the public sector borrowing requirements (PSBR) are expected to amount to 3.1 percent of GDP.

      Total budgetary revenues according to the Revenue Law for 2003 are estimated at 1.525 trillion pesos.

Main changes

      Both the corporate income tax rate and the maximum personal income tax rate will be reduced from 35 to 34 percent in 2003. These rates will then decline gradually to reach 32 percent in 2005.

      The gradual decline in income tax rates will foster economic activity and employment by reducing the opportunity cost of operating in the formal economy, thereby strengthening the fiscal stance.

            The fiscal measures also incorporate a new mechanism for the immediate deduction of investment expenditures carried out outside the metropolitan areas of Me xico City , Guadalajara and...

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